{"id":44484,"date":"2025-02-28T16:21:43","date_gmt":"2025-02-28T10:51:43","guid":{"rendered":"https:\/\/coinswitch.co\/switch\/?p=44484"},"modified":"2025-06-09T10:53:30","modified_gmt":"2025-06-09T05:23:30","slug":"section-115bbh-and-vda-tax","status":"publish","type":"post","link":"https:\/\/coinswitch.co\/switch\/crypto\/section-115bbh-and-vda-tax\/","title":{"rendered":"Section 115BBH: Virtual Digital Assets Taxation Scheme (Cryptocurrency Tax)"},"content":{"rendered":"\n

With the rising popularity of crypto and digital assets, governments worldwide are implementing regulations to oversee the new asset class. India took a significant step in this direction by introducing Section 115BBH<\/strong> in the Union Budget 2022<\/a>. The new provision included in the Finance Act, 2022, outlines the taxation framework for Virtual Digital Assets (VDAs)<\/strong>, including crypto and NFTs. The changes became effective April 1, 2023.  <\/p>\n\n\n\n

In this blog, we\u2019ll discuss the key provisions of Section 115BBH, its implications for investors, and how traders and holders can navigate this tax structure effectively.<\/p>\n\n\n\n

Understanding Section 115BBH<\/strong><\/h2>\n\n\n\n

Section 115BBH was introduced in the Union Budget 2022-23<\/strong> to give clarity on tax on income from virtual digital assets. The primary objective of this section was to ensure that income from trading, transferring, or investing in VDAs is taxed uniformly.<\/p>\n\n\n\n

Key Highlights of Section 115BBH:<\/strong><\/h3>\n\n\n\n
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  1. Flat Tax Rate<\/strong>: A 30% tax<\/strong> applies to any income generated from the transfer of virtual digital assets.<\/li>\n\n\n\n
  2. No Deduction Allowed<\/strong>: Unlike other investment instruments, taxpayers cannot<\/strong> claim deductions for expenses incurred (except the cost of acquisition).<\/li>\n\n\n\n
  3. TDS at 1%<\/strong>: A 1% Tax Deducted at Source (TDS)<\/strong> is levied on crypto transactions exceeding Rs. 50,000 (Rs. 10,000 in some cases) in a financial year under Section 194S<\/strong>.<\/li>\n\n\n\n
  4. Loss Set-Off Not Allowed<\/strong>: Losses from VDA transactions cannot be adjusted<\/strong> against any other income.<\/li>\n\n\n\n
  5. Gifting of Crypto Assets<\/strong>: If a person receives crypto or NFTs as a gift, they will be taxed under income from other sources<\/strong>. Some exceptions are allowed, like gifts from close family or under \u20b950,000.<\/li>\n<\/ol>\n\n\n\n

    Read More: A comprehensive guide to income tax returns (ITR): How to file and track your returns<\/a><\/p>\n\n\n\n

    Impact on investors and traders<\/strong><\/h2>\n\n\n\n

    The new taxation policy has significantly altered the landscape for crypto users in India. Here\u2019s the impact on different stakeholders at a glance.<\/p>\n\n\n\n

    1. Retail Investors<\/strong><\/h3>\n\n\n\n