Virtual Digital Assets (VDA) — India
Virtual Digital Assets (VDAs) are defined by Section 2(47A) of the Income-tax Act, inserted by the Finance Act 2022 , to cover any information / code / number / token (not Indian currency or foreign currency) generated through cryptographic means, pl
Virtual Digital Assets (VDAs) are defined by Section 2(47A) of the Income-tax Act, inserted by the Finance Act 2022, to cover any information / code / number / token (not Indian currency or foreign currency) generated through cryptographic means, plus NFTs and any other digital asset notified by the government. Cryptocurrencies (Bitcoin, Ether), stablecoins, and NFTs all fall in scope.
Tax treatment (Section 115BBH + 194S):
- 30% flat tax on gains from VDA transfer — no slab benefit, no indexation
- 1% TDS under Section 194S on consideration above ₹10,000 per transaction (₹50,000 for specified persons annually)
- Losses from VDAs cannot be set off against any other income, and cannot be carried forward
- Only the cost of acquisition is deductible — no expenses, no infra cost
INR example: You buy 0.1 BTC for ₹5,00,000 and sell for ₹7,00,000. Gain ₹2,00,000 × 30% = ₹60,000 tax + 4% cess. The exchange withholds 1% TDS = ₹7,000 at the sale, credited to your PAN in Form 26AS. If on a separate trade you lose ₹1,00,000 on Ether, that loss is forfeited — cannot reduce the BTC gain.
RBI stance: VDAs are not legal tender in India. RBI has consistently warned against private cryptocurrencies citing macro-financial stability risk. Banks cannot directly support crypto businesses. Indian exchanges (CoinDCX, WazirX, etc.) must register with FIU-India as VDA Service Providers under PMLA from March 2023.
When relevant:
- Filing ITR after any crypto trade — declare under Schedule VDA
- Receiving NFT royalties — same 30% applies
- Foreign exchange usage triggers LRS reporting too
Disclaimer: VDAs are high-risk speculative assets. RBI does not recognize them as legal tender. ~100% loss is possible — multiple Indian exchanges have collapsed (WazirX hack 2024, Vauld). No investor protection scheme covers VDA losses. CBDT FAQs (June 2022) clarify treatment. Educational only — not advice. AMFI ARN-314872.