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Taxation on
VIRTUAL DIGITAL ASSET
(VDA)
Presented by: Gaurang Gaur
◊Overview
◊Meaning of
Virtual Digital
Assets (VDA)
Taxation on VDA
Transfer
(Sec
115BBH)
Gifting
(Sec 56(2)(x))
TDS
(Sec 194S)
Conclusion
Meaning of
Virtual Digital Asset
01
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;
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
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.
Taxation on
Virtual Digital Asset
02
VDA
30%
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.
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.
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%
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
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
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
Taxation on VDA
Taxation in case of Gifting –
◊ Value > 50,000
◊ In hands of recipient
◊ Normal Slab rate
◊ Received from relatives -
Exempted
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
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
Conclusion
04
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%
Thanks!

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Taxation on VDA Main.pptx by Gaurang Gaur.pptx

  • 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
  • 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
  • 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%