#VDA - VIRTUAL DIGITAL ASSETS TAXATION AND FORM IN INDIA

Virtual Digital Asset is defined under section 2(47A) of the Act 

 As per Section 2(47A) of Income Tax Act, 1961, unless the context otherwise requires, the term “Virtual Digital Asset (VDA)” means, 

 (a) any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically; 

(b) a non-fungible token or any other token of similar nature, by whatever name called;- 

(c) any other digital asset, as the Central Government may, by notification Due to the Volume and growth in the Virtual Digital Assets (Crypto Currency) the Government introduced for the First time, the provision of taxation of Virtual Digital Assets (Crypto Currency) assets is introduced in Budget 2022. 

 Virtual Digital Assets are Crypto Currencies and Non-Fungible Tokens (NFT). Following section 115BBH shall be inserted by the Finance Act, 2022, w.e.f. 1-4-2023: Tax on income from virtual digital assets. 115BBH. 

(1) Where the total income of an assessee includes any income from the transfer of any virtual digital asset, notwithstanding anything contained in any other provision of this Act, the income-tax payable shall be the aggregate of— 

      (a) the amount of income-tax calculated on the income from transfer of such virtual digital asset at               the rate of 30% ; and 

      (b) the amount of income-tax with which the assessee would have been chargeable, had the total  ncome of the assessee been reduced by the income referred to in clause (a). 

 (2) Notwithstanding anything contained in any other provision of this Act,— 

 (a) no deduction in respect of any expenditure (other than cost of acquisition, if any) or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the income referred to in clause (a) of sub-section (1); and 

 (b) no set off of loss from transfer of the virtual digital asset computed under clause (a) of sub-section (1) shall be allowed against income computed under any provision of this Act to the assessee and such loss shall not be allowed to be carried forward to succeeding assessment years. 

 (3) For the purposes of this section, the word "transfer" as defined in clause (47) of section 2, shall apply to any virtual digital asset, whether capital asset or not.

New VDA form is issued and seperate Schedule is introduced :

A separate “Schedule – VDA” has been added to report income from virtual digital asset such as crypto currency. Tax provisions for taxation of VDAs was introduced from FY 2022-23 hence the addition of new schedule.