The Income Tax Appellate Tribunal (ITAT) in Jodhpur, India, has ruled that profits from cryptocurrency sales made before the Virtual Digital Asset (VDA) regime was introduced in 2022 should be treated as capital gains. This classification of crypto as capital assets resolves previous ambiguity surrounding crypto taxation and ensures fair treatment under long-term capital gains laws. The ruling came from a case where an individual purchased Bitcoin in 2015-16 and sold it in 2020-21. The ITAT dismissed the initial argument that cryptos lacked inherent value and could not be classified as property, stating that under the Income Tax Act, crypto constitutes property rights. This ruling is significant for long-term crypto holders and provides a precedent for challenging unjustified tax demands or scrutiny. It is particularly relevant for transactions conducted before April 1, 2022, when the VDA-specific tax regime was introduced. Under the post-2022 framework, all crypto gains are taxed at a 30% rate, with no distinction between long- and short-term holdings and no deductions allowed.



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