Income Tax on Cryptocurrency, NFT & VDA (Virtual Digital Asset)

Introduction of Section 115BBH: Flat Tax Rate: Income from VDAs taxed at a flat rate of 30% from April 1, 2022. Comprehensive Provisions: Covers transfers, gifting, expenses, and loss management. Section 194S - TDS on VDA Transfer: Mandatory TDS: 1% TDS on VDA transfers to ensure tax compliance.

Definition of VDA and Taxation under Section 115BBH: Inclusion: Cryptocurrency, NFTs, and notified digital assets. Taxation: 30% flat tax rate with deductions for acquisition cost. Calculation of Capital Gain Tax on Cryptocurrency Transfer: Formula: Capital Gain = Selling Price - Purchase Price. Limitations: No deductions or exemptions under Chapter VI-A.

Loss Treatment and TDS on VDA Transfer: Loss Treatment: No set-off between VDAs, against other income, or carry forward. TDS Mandate: Section 194S imposes 1% TDS on VDA transfers exceeding specified thresholds. Income Tax Notice for Crypto Traders: Inquiry Notices: Sent under Section 148A for income not reported in ITRs. Data Source: PAN, Aadhaar, or linked bank accounts from crypto exchanges.

Responding to the Notice: Timeframe: Respond within specified time. Methods: Email or e-proceedings option. Justification: Provide detailed explanation with supporting documents. GST on Cryptocurrency, NFT, VDA: Classification as Goods: Likely subject to GST as per interpretation. Awaited Clarification: Formal clarification from GST Council pending.