Legal Reference
Section 67A (VDA 30%), Section 67B (TDS 1% on VDA transfer), Schedule VDA in ITR, ITA 2025 | Finance Act 2022 introduced VDA taxation | No loss set-off, no carry-forward
1. VDA Defined
Virtual Digital Assets (VDAs) include all cryptocurrencies (Bitcoin, Ethereum, BNB, Solana etc.), NFTs (Non-Fungible Tokens), and any other digital assets defined by the government under ITA 2025. The definition is broad and technology-neutral — covering both current and future digital asset types.
2. Tax Rate: 30% Flat on All VDA Gains
Section 67A imposes 30% tax + 4% cess = 31.2% effective rate on all VDA income. Key features of this rate:
- No distinction between short-term and long-term holding — all gains taxed at 30%
- Section 157 rebate (zero tax up to Rs 12L) does NOT apply to VDA income — tax from the first rupee
- No deduction allowed except cost of acquisition
- No loss from one VDA can offset gain from another
- No carry-forward of VDA losses
3. What Triggers VDA Tax
| Transaction | Taxable Event? | Basis of Tax |
|---|
| Sale of crypto for INR | Yes | 30% on (sale price minus cost) |
| Crypto-to-crypto swap | Yes | 30% on (FMV of received asset minus cost) |
| NFT sale | Yes | 30% on gain |
| Staking rewards received | Yes | 30% on FMV at time of receipt |
| Mining income | Yes | 30% on FMV at time of mining |
| Airdrop received | Yes | 30% on FMV at receipt |
| Holding (no sale) | No | No taxable event |
4. TDS Under Section 67B
When any person pays consideration for transfer of a VDA exceeding Rs 10,000 (Rs 50,000 for specified persons), TDS at 1% must be deducted under Section 67B. Indian exchanges deduct TDS automatically on each sell transaction. For peer-to-peer trades, the buyer deducts and deposits TDS. The TDS (1% of sell consideration) appears in the seller Form 26AS as a credit — offsetting their 30% tax liability.
5. Cost of Acquisition for Crypto Received as Salary/Gift
If crypto was received as salary, the FMV at the time of receipt is the cost of acquisition (the salary amount already taxed as perquisite under Section 17(2)). If received as a gift from a non-relative and taxed as Other Sources income (above Rs 50K threshold), that FMV is the cost. This prevents double taxation when the same crypto is later sold.
6. Reporting in ITR
VDA income must be reported in Schedule VDA in ITR-2 or ITR-3. Each transaction must be entered: type of VDA, date of acquisition, cost, date of transfer, sale consideration, and gain. Aggregate all transactions from all exchanges (Indian and foreign). International exchange transactions must also appear in Schedule FA (foreign assets). AIS now shows VDA TDS credits — mismatch triggers notices.
7. Why TaxClue
Active crypto traders with hundreds of transactions need systematic capital gains computation. TaxClue reconciles exchange statements, computes Schedule VDA, and files ITR accurately. Contact us for crypto tax under ITA 2025.
Disclaimer
This article is for general informational and educational purposes only. It does not constitute legal, financial, or professional tax advice. Readers are advised to consult a qualified Chartered Accountant or tax professional before making any decisions. TaxClue Consultech Pvt Ltd accepts no liability. All case studies and examples in this article are illustrative only and do not represent actual persons or transactions.
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❓ Frequently Asked Questions
What is the tax on cryptocurrency in India?
Under Section 67A of ITA 2025, all income from VDA (Virtual Digital Asset) transfers including crypto sale, swap, NFT sale, staking, and mining is taxed at a flat 30% plus 4% cess — effective 31.2%. No basic exemption applies and the Section 157 rebate that gives zero tax on income up to Rs 12L does NOT apply to VDA income. Even if total income is below Rs 12L, the VDA portion is taxed at 30% from the first rupee.
Can crypto losses be set off against other gains?
No. VDA losses cannot be set off against any income — not salary, business profit, or capital gains from shares/property. Losses from one cryptocurrency also cannot offset gains from another VDA. VDA losses also cannot be carried forward to future years. This makes VDA the most restrictive income category in ITA 2025 — each profitable transaction is independently taxed at 30% with no relief from any other loss.
Is crypto-to-crypto swap taxable?
Yes. Swapping one cryptocurrency for another is treated as a sale of the first crypto at its fair market value on the date of swap, triggering VDA tax at 30%. For example, swapping Bitcoin worth Rs 5 lakh for Ethereum means a Rs 5L 'sale' of Bitcoin — the gain (Rs 5L minus your BTC cost) is taxed at 30%. No INR needs to change hands for a taxable event to occur.
What is TDS on crypto?
Under Section 67B of ITA 2025, 1% TDS is deducted on VDA consideration above Rs 10,000 per transaction. Exchanges deduct this automatically when users sell. For P2P trades, the buyer deducts 1% TDS on the full consideration and deposits it. This TDS (1% of sell amount, not just profit) appears in the seller Form 26AS. At 30% tax on gains but 1% TDS on gross consideration, TDS on crypto often exceeds actual tax — resulting in a refund for long-term holders.
Are staking rewards taxable?
Yes. Staking rewards, mining income, and airdrops are all taxable as VDA income at 30% under Section 67A of ITA 2025. The taxable amount is the fair market value (INR equivalent) of the crypto at the time of receipt. When these tokens are later sold, the cost of acquisition is the FMV at which they were initially taxed — preventing double taxation. Keep records of FMV at the date of each staking reward or mining event.
