Taxation of Cryptocurrency & Virtual Digital Assets (VDAs) in India: What You Need to Know

• Admin

With the rising popularity of crypto, it’s essential to stay updated on how gains from Virtual Digital Assets (VDAs) are taxed under the Income Tax Act in India.

🔖 Here’s a quick breakdown:

🖊️ Classification: Crypto assets and other digital assets are classified as Virtual Digital Assets (VDAs).

🖊️ Taxation: Gains from the sale or transfer of VDAs are taxed at a flat 30% under Section 115BBH, with no deductions (except cost of acquisition of same VDA).

📌 Note: Even a loss on sale of one VDA (e.g., Crypto A) cannot be set off against profit on another VDA (e.g., Crypto B).

💰 Taxable Events include:

• Converting crypto to INR or other fiat

• Trading one crypto for another

• Using crypto for purchases or payments

💼 If you receive crypto as salary or business income, it's taxed under regular income slabs.

But any future gains from sale/transfer are taxed at 30%.

💷 1% TDS is applicable on VDA transfers under Section 194S, which can be adjusted against your total tax liability.

⚠️ Important Scenario:

Let’s say you sell crypto worth ₹1,00,000, originally purchased for ₹99,900. You may think it’s immaterial to report.

However, income from VDAs is reported under a special head - Income from VDA in Other Sources" head.

If there's TDS on VDA sale but no matching income reported, the IT Department may flag a profile mismatch — taxpayers have received notices even for non-reporting of losses.

🎯 Special Cases:

• Airdrops (Gifts) > ₹50,000 → Taxed at 30%

• Mining Income → Treated as Business Income

• NFTs → Considered VDAs and taxed at 30%

🚨 Non-compliance can lead to Penalties

Proper reporting is not optional — it's critical.

✅ Stay compliant, stay ahead.

Ensure accurate disclosure in your ITR.

🚀 Let’s simplify crypto taxation and maximize your returns !