File revised-return before assessment or notice, updated return thereafter

The finance ministry has flagged more than 44,000 taxpayers for failing to report virtual digital asset (VDA) transactions in their income-tax returns (ITR).

- SANJEEV SINHA

If you have invested in cryptos, here is what you need to know to keep the taxman at bay.

Disclosure norms

Schedule VDA requires taxpayers to report every VDA transfer during the year, including the acquisition date, transfer date, tax head, cost of acquisition, sale consideration, and resulting income.

TDS-ITR mismatch triggers scrutiny

When VDAs are traded or sold through a registered virtual asset service provider (VASP), TDS under Section 194S of the Income-Tax (IT) Act, 1961, is reported by the VASP and reflected in the Annual Information Statement (AIS) and Form 26AS. This data is matched with disclosures in the ITR. “Mismatches arise when TDS appears in AIS or Form 26AS, but the related VDA income is not reported in Schedule VDA, or when the taxpayer claims more TDS credit than reflected in the system,” says Sumeet Hemkar, partner, Deloitte India. “These alerts are typically triggered when discrepancies exceed ₹1 lakh,” says Rony Antony, partner and leader ~ direct tax: south, tax and regulatory advisory, BDO India.

Calculating cost and capital gains