India is implementing a 30 percent tax rate on income from virtual digital assets, such as cryptocurrency and NFT. For this purpose, section 115BBH has been inserted into the Income-tax Act, 1961. While the taxation will be effective from April 1, 2022, cryptocurrency transactions for the previous fiscal year (FY 2021-22 period) will also be taxed. Other tax implications on virtual digital assets (VDA) include one percent TDS on transfers, no basic exemptions, no set-off on losses, no indexation benefits irrespective of the holding period, and taxation of gifts.
Applicable from April 1, 2022, any gains made from the sale of crypto assets will be taxed at 30 percent. For instance, if an investor buys crypto assets worth INR 40,000 and sells them for INR 50,000, generating a profit of INR 10,000, they must pay a 30 percent tax of INR 3000.
Applicable from July 1, 2022, there will be one percent tax deducted at source (TDS) in case of a resident seller for the transfer of virtual digital assets. For this to be implemented, necessary amendments will be made under section 194S of the Income-tax Act. This one percent TDS will be deducted irrespective of gain or loss.