Taxation on Virtual Digital Assets

Current Context : The Central Board of Direct Taxes is intensifying oversight of tax evasion and laundering via Virtual Digital Assets, such as cryptocurrencies, under provisions introduced by the Finance Act, 2022.

ABOUT VIRTUAL DIGITAL ASSET TAXATION

• Definition: Virtual Digital Assets are assets expressed in digital form that use blockchain or cryptographic technology for recording ownership and transactions.
• Tax Provisions:
  • A flat thirty percent tax on gains arising from transfers of Virtual Digital Assets.
  • A one percent tax deducted at source on each transfer of Virtual Digital Assets between residents.
• Compliance Approach:
  • Non‑intrusive Usage of Data to Guide and Enable (“nudge”) philosophy by the Central Board of Direct Taxes to encourage voluntary disclosure of undeclared Virtual Digital Asset income.