Taxation of Virtual Digital Assets (VDAs & Crypto): Section 115BBH 30% Flat Rate & Section 194S TDS Protocols

Published: February 08, 20256 min readEffective: Applicable across all ongoing financial years

View Official Gazette / Govt Source Consult Senior Partner

Executive Regulatory Summary

Navigating the strict tax regime governing cryptocurrencies, NFTs, and tokens in India. Detailed overview of 30% flat taxation under Section 115BBH without loss set-off, mandatory 1% TDS under Section 194S, foreign exchange FIU-IND compliance, and Schedule VDA return filing.

Key Statutory Takeaways

Flat 30% tax rate on transfer of Virtual Digital Assets plus applicable surcharge and 4% cess.
No deduction allowable except the actual cost of acquisition; no deduction for mining infra, internet, or brokerage fees.
Losses from VDA transactions cannot be set off against gains from other VDAs or any other income stream.
1% TDS mandated under Section 194S on consideration paid for transfer of VDAs exceeding statutory thresholds.

Actionable Compliance Checklist for Businesses

Step-by-step advisory measures prescribed by ASGR and CO for immediate adherence:

1Download annual ledger statements and transaction reports from registered exchanges.

2Fill Schedule VDA with granular disclosure of date of acquisition, date of transfer, cost, and sale consideration.

3Reconcile 1% TDS deducted by exchanges against Form 26AS Part E.

4Ensure overseas crypto wallet balances are declared under Schedule FA if holding foreign accounts.

1. The Zero Loss Set-Off Rigor under Section 115BBH

Section 115BBH explicitly debars assessees from setting off losses incurred in one crypto token against profits realized in another token. Every profitable trade is taxed at 30%, while losses cannot even be carried forward to subsequent assessment years.

Target Entities Governed by this Notification:

Crypto Traders & Digital Asset InvestorsCrypto Exchanges & Web3 CompaniesHigh Net-Worth IndividualsChartered Accountants

Advisory Published By

CA Ghanshyam Sharma

Partner - Direct Tax & Audit • B. Com, FCA, Concurrent Bank Auditor

ASGR and CO, Chartered Accountants (Peer Review Certified: #018Xxx)

Statutory Disclaimer: This publication is compiled by ASGR and CO solely for general informational and educational purposes to assist corporate clients and peers in understanding statutory notifications. It does not constitute legal, tax, or formal secretarial advice. Before acting upon any provisions, specific professional counsel should be sought.

Official Statutory Link