Explanation
Section 115BBH, introduced by the Finance Act 2022 effective from 1 April 2022, created a specific tax regime for Virtual Digital Assets (VDAs). VDAs include cryptocurrency, non-fungible tokens (NFTs), and any other digital asset notified by the Central Government. The tax rate is a flat 30% — no slab benefit applies regardless of income level. The only permitted deduction is cost of acquisition; no other expenses (transaction fees, internet charges, etc.) are deductible. Loss from transfer of one VDA cannot be set off against profit from another VDA, nor against any other head of income. Gifted VDAs are taxable at fair market value in the recipient's hands under the existing gift taxation provisions. TDS at 1% is deducted by exchanges and buyers under §194S on transactions above ₹10,000 (₹50,000 for specified persons). Taxpayers must report all VDA transactions in Schedule VDA of the ITR regardless of profit or loss. Staking rewards, airdrops, and mining income may be treated as income from other sources at applicable rates — their treatment is still evolving. Verify on the income-tax portal before filing.