Tough to evade taxes on crypto income now

What is cryptocurrency? CRYPTOCURRENCY IS A form of digital money that exists exclusively online. Unlike traditional currency (such as rupees or dollars), it has no physical form and is not controlled by any bank or government. Instead, it operates on blockchain technology, which securely records and verifies all transactions. The I-Tax Act does not explicitly define cryptocurrency. However, it includes provisions for taxing Virtual Digital Assets (VDA), which encompass both cryptocurrencies and Non-Fungible Tokens (NFTs). A VDA refers to any digitally generated information, code, number, or token (excluding currency) that is created using cryptographic methods, carries an implied or stated value, and can be stored, transferred, or traded electronically. How it is taxed VDAs are taxed at a special rate under Section 115BBH. A flat tax of 30% (excluding surcharge and cess) is levied on income from the transfer of cryptocurrency. Additionally, no deductions are allowed for computing taxable income, except for the cost of acquisition. This section also prohibits the set-off or carry-forward of losses incurred in cryptocurrency transactions. Furthermore, as per section 194S, a 1% TDS is applicable on the transfer of cryptocurrency to a resident. The TDS threshold varies based on the payer's income.

- Neetu Brahma

For individuals without business income or with business income below ₹1 crore or professional income below ₹50 lakh, TDS applies only if the transaction value exceeds ₹50,000.

For other taxpayers, the threshold is ₹10,000.

What changes now?