taxation on virtual digital asset

1. Taxation on
VIRTUAL DIGITAL ASSET
(VDA)
Presented by: Gaurang Gaur

2. ◊Overview
◊Meaning of
Virtual Digital
Assets (VDA)
Taxation on VDA
Transfer
(Sec
115BBH)
Gifting
(Sec 56(2)(x))
TDS
(Sec 194S)
Conclusion

3. Meaning of
Virtual Digital Asset
01

4. Meaning of VDA
As per section 2 (47A), “virtual digital asset" means—
(a)
◊ Any information or code or number or token
◊ generated through cryptographic means or otherwise,
◊ providing a digital representation of value exchanged
◊ having inherent value,
◊ use in any financial transaction or investment
◊ can be transferred, stored, or traded electronically;

5. Meaning of VDA
(b)
A non-fungible token (NFT) or any
other token of similar nature
(c)
any other digital asset, as the Central
Government may, by notification in the
Official Gazette specify:
*The Bored Ape Yacht Club Logo Via Yuga

6. Meaning of VDA
Provided that the Central Government
may, by notification in the Official
Gazette, exclude any digital asset
from the definition of the virtual digital
asset subject to such conditions as
may be specified therein.

7. Taxation on
Virtual Digital Asset
02
VDA
30%

8. Taxation on VDA
As per Section 115BBH,
(1) Income from transfer of virtual digital asset to be taxed at the rate of 30%
(2) (a) no deduction in respect of any expenditure (other than cost of
acquisition), allowance or set off of any loss
(b) no set off of loss from transfer of the VDA shall be allowed against
income computed under any provision of this Act
and such loss shall not be allowed to be carried forward to
succeeding assessment years.

9. Taxation on VDA
Clarifications:
1. Loss of one VDA can not be set off
against income from any other VDA
2. Expenses related to Mining are not
allowed, Cost of Acquisition is allowed
3. Cess and surcharge will be applicable.

10. Taxation on VDA
Examples:
1. 1000 X token purchased on 16-04-2019 for ₹ 150 each and sold on
following dates-
Date of sale Qty of
sale
Sales Cost Brokerage Taxable
amount
Tax rate
01-04-2022 600 450000 15000 360000 30%
17-02-2023 200 24000 8000 (6000) 0%
13-03-2023 200 35000 7000 5000 30%

11. Taxation on VDA
Examples:
2. Set-off of VDA loss
Loss on sale of Bitcoin ₹1,00,000
income under PGBP head ₹12,10,000
Taxable income ₹12,10,000
Tax Rate Normal Slab rate
Loss to be carried forward 0

12. Examples:
Taxation on VDA
3. Loss from any other income cannot be set off against
income from VDA
Income from Sale of USDC ₹5,00,000
Loss from sale of land ₹50,000
Taxable income ₹5,00,000
Tax Rate 30%
Loss to be carried forward ₹50,000

13. Taxation on VDA
Examples:
4. Loss from one VDA cannot be set off with the
income of another VDA
Income from Sale of USDC ₹5,00,000
Loss from sale of land ₹50,000
Taxable income ₹5,00,000
Tax Rate 30%
Loss to be carried forward ₹50,000

14. Taxation on VDA
Taxation in case of Gifting –
◊ Value > 50,000
◊ In hands of recipient
◊ Normal Slab rate
◊ Received from relatives -
Exempted

15. Taxation on VDA
Rate -1%
Threshold –
₹10000 & ₹50000 (for
specified persons)
Deductor – Person
responsible for paying any
sum by way of
consideration for the
transfer of a VDA
Deductee –
resident person.
Section 203 & 206AB not
applicable
But section 206AA
applicable
Section 194S

16. Taxation on VDA
On gross
amount
1. wholly in
cash
2. wholly in
Kind
3. Wholly
in another
VDA
4. Partly in
1/2/3
Amount on which TDS to be deducted –
If TDS or TCS is required to be deducted in any other section along with 194S –
Section 194S
will prevail

17. Conclusion
04

18. Conclusion
◊ Tax rate is 30%
◊ No expenditures are allowed except COA
◊ Loss from VDA can neither be set off nor carried
forward
◊ Any other Loss cannot be set off from the
Income of VDA
◊ TDS rate is 1%

19. Thanks!