TechFlow reports that on December 17, according to Decrypt, the Income Tax Appellate Tribunal (ITAT) in Jodhpur, India, ruled that profits from cryptocurrency sales prior to the introduction of the Virtual Digital Assets (VDA) regime in 2022 should be treated as capital gains. The ruling classifies cryptocurrencies, including Bitcoin, as capital assets, resolving previous ambiguities surrounding cryptocurrency taxation.
The decision stems from a case involving an individual who purchased Bitcoin worth $6,478 (approximately ₹50.5 lakh) during 2015–16 and sold it in 2020–21 for $788,063.84 (approximately ₹669 crore). The taxpayer argued that since the holding period exceeded three years, the sale proceeds should be considered long-term capital gains. Initially, the assessing officer disagreed, contending that cryptocurrencies lack intrinsic value and cannot be classified as property. However, the tribunal ruled that because the holding period surpassed three years, the profit qualifies as long-term capital gains, allowing the taxpayer to claim deductions under prevailing laws.
The ITAT rejected the tax authority's argument, stating that cryptocurrencies constitute property rights under Section 2(14) of the Income Tax Act. The tribunal noted that the definition of capital assets includes "any kind of property held by the assessee," encompassing rights or claims over assets.
