pvtltd.co

Direct Tax

Crypto / VDA Tax

Virtual digital asset tax under the Income-tax Act 1961 — the s.2(47A) definition, 30% tax on income under s.115BBH, 1% TDS under s.194S, and CBDT Circular 13/2022.

Reviewed by CA Harun Raaj, ICAI Reg. No. 238303·Last reviewed:
Starting from Discuss with usTypical timelineCrypto / VDA Tax

Virtual digital asset income is taxed at 30% under s.115BBH with no loss set-off, and 1% TDS applies on transfers under s.194S — we compute, file, and keep you TDS-compliant.

What is included
  • • VDA transaction reconciliation — exchanges, wallets, and P2P transfers
  • • Capital gains / business income classification and computation under s.115BBH
  • • Cost of acquisition determination for each VDA
  • • 1% TDS deduction and payment tracking under s.194S
  • • ITR filing with VDA schedules
  • • Notice response support where AIS / 26AS mismatches arise
Documents required
  • • Exchange and wallet statements for the year
  • • Purchase records — cost and date for each asset
  • • AIS and 26AS for the year
  • • Bank statements showing VDA-related flows
Government fees

See the fee table below for the statutory filing charge and common delay logic.

Legal basis
  • • Section 2(47A) of the Income-tax Act 1961
  • • Section 115BBH of the Income-tax Act 1961
  • • Section 194S of the Income-tax Act 1961
  • • CBDT Circular No. 13 of 2022
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Process

How the service works

The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.

Step 1Reconcile

Reconcile the transactions

We pull exchange, wallet, and bank records and reconcile every VDA purchase, sale, transfer, and swap for the year.

Step 2Compute

Compute the income

We classify each transaction and compute income under s.115BBH — 30% on gains with only the cost of acquisition deductible.

Step 3TDS

Verify the TDS position

We check 1% TDS under s.194S — deducted on your transfers, and credited to you on purchases — and reconcile it with 26AS / AIS.

Step 4File

File the return

We file the ITR with the VDA schedules and any 26QE position, and confirm the tax payable before the due date.

Step 5Notices

Handle notices

If AIS or 26AS mismatches trigger a notice, we respond with the reconciled transaction trail.

AEO summary

Income from crypto and other virtual digital assets is taxed at 30% under s.115BBH with no deduction except the cost of acquisition, no loss set-off, and 1% TDS on transfers under s.194S. We compute, file, and keep you TDS-compliant.

The regime in one view

The VDA regime is deliberately simple and deliberately harsh: 30% flat tax under s.115BBH, only the cost of acquisition deductible, no loss set-off, and 1% TDS under s.194S on transfers. The AIS and 26AS statements give the department a near-complete picture of your transactions, so under-reporting is visible before you file.

The compliance work is therefore reconciliation, not strategy: every purchase, sale, swap, and transfer must be traceable to a cost and a date, and the TDS deducted by or on you must match the statements.

  • • 30% flat rate under s.115BBH
  • • 1% TDS on transfers under s.194S
  • • No loss set-off — a losing year gives no relief

Where companies get tripped up

Companies holding crypto on the balance sheet face a different set of questions: is the gain business income or capital gains, how is a swap between two VDAs treated, and what is the cost basis when tokens are received as payment for services? Each has a specific answer under the Act, and getting it wrong compounds across years.

Our role is to build the transaction ledger once — with costs and dates for every asset — so each year's computation is mechanical and defensible.

  • • Swaps and received-tokens priced at correct cost basis
  • • TDS position reconciled with 26AS every quarter
  • • A transaction ledger that makes each year's filing easy

Government fees

Fee breakdown

ItemFeeNotes
E-filingNilThe return filing itself is free; late filing attracts a late filing fee under s.234F.
TDS payment and returnAs applicableTDS deducted under s.194S is deposited with the government and reported quarterly in Form 26QE.

Timeline

Typical turnaround

Typical timeline usually means a 1–2 weeks turnaround, assuming documents are complete and any board or shareholder approvals are already in place.

Pricing note

Professional fees depend on transaction volume and whether the work includes TDS filings or a notice response; there is no government fee for e-filing itself.

Related services

Keep the company moving

ITR Filing

CA-managed ITR filing with AIS / 26AS reconciliation — the annual return that carries the VDA schedules

Direct Tax Advisory

Tax planning and assessment support under the Income-tax Act for companies and startups

TDS Return Filing

Quarterly TDS returns — including Form 26QE for VDA transfers under s.194S

Advance Tax

Advance tax computation and instalment calendar to avoid interest under s.234B / s.234C

FAQ

Frequently asked questions

How is crypto income taxed under the current law?
Income from the transfer of a virtual digital asset is taxed at 30% under s.115BBH of the Income-tax Act 1961, with no deduction for expenses except the cost of acquisition, and no set-off or carry-forward of losses from VDA against other income. The 30% rate applies to the full income, not slab rates.
Who deducts the 1% TDS under s.194S?
Under s.194S, any person responsible for paying consideration for a VDA transfer must deduct 1% TDS. CBDT Circular 13/2022 clarifies how this applies across exchanges, brokers, and peer-to-peer transfers — including which party deducts in an exchange-mediated transaction.
Can I set off crypto losses against salary or business income?
No. Section 115BBH(2) expressly bars setting off losses from the transfer of a VDA against any income, and also bars carrying them forward to future years. This is one of the most common misconceptions — a losing crypto year gives no tax relief at all.
What should you send us before we start?
Send the exchange and wallet statements, purchase records with dates and costs, AIS and 26AS for the year, and the bank statements showing VDA flows. That is enough for us to reconcile the position and compute the tax accurately.

Canonical reference: https://www.pvtltd.co/services/crypto-vda-tax

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We can help with the filing, the legal mapping, and the follow-up work that keeps the company compliant after submission.

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