Bitcoin tax case: An ex-employee of Infosys recently won a case against the Income Tax Department after the Jodhpur Income Tax Tribunal (ITAT) decided that the cryptocurrency (Bitcoin) sold by the individual was a capital asset. The ITAT also ruled that the Bitcoin investment was funded from the individual’s salary income from Infosys.
The ITAT stated that the person should be able to pay a lower rate of tax (20%) on his profits from the sale, and ₹4.95 crore as income tax exemption under section 54 F.
The individual taxpayer therefore paid a lower tax of € ₹33 lakh ( ₹33,60,485) on the proceeds from the sale. The Infosys employee pre-purchased the Bitcoin ₹5 lakh, and sold for ₹6.69 million.
Though the ex-Infosys employee had already lost the case against the Income Tax Department of the National Faceless Appeal Center (NFAC) Delhi, the Jodhpur ITAT allowed the person to file a fresh appeal.
‘The intention appears to be to retain long-term capital gains’
The Jodhpur ITAT concluded that the ex-Infosys employee was not regularly buying or selling cryptocurrency shares. “He does not regularly engage in the purchase or sale of shares or cryptocurrency. His intention appears to be to hold long-term capital gains, which is further supported by the fact that he made an investment in cryptocurrency in the financial year 2015-16, which was sold in the financial year 2020-21,” Jodhpur said ITAT.
“The profits from the sale of cryptocurrency were then reinvested in the purchase of a house. This shows that the assessor’s intention in investing in cryptocurrency was to hold it and earn long-term capital gains,” the Jodhpur ITAT said, according to reports.
The Jodhpur ITAT ruled that cryptocurrencies such as Bitcoin and Ethereum are considered capital assets, meaning profits from their sale are classified as capital gains rather than income from other sources. This ruling applies to transactions carried out before April 1, 2022, when the government introduced specific tax rules for cryptocurrencies.
