Here is the All About the Crypto Transaction Taxation

Relevant Provisions of the Law
Section 115BBH
Section 194S
Section 206AA
Section 2(47A)

ALL ABOUT CRYPTO

Relevant Section’s

Sec 115 BBH Tax@30%

Sec 1945 -TDS@1%

Sec 206AA TDS @ 20%

Sec 2(47A)- Defination of VDA

sec 56 (2)(x) Gitt Taxation

Section 115 BBH – Tax on Income from VDA

  • Flat Tax Rate of 30% + SC + Cess
  • Disposion includs Sale, Exchange, Relinquishment, Extinguishment..

Tax Rate Apply uniformly Regardless of

Holding Period
Transaction Type
Head of Income
Type of Income		Nothing Matters Tax is flat @30%

Other Important Points

  • No Deduction Except Cost of Acquision.
  • No Indexation Benefit Allowed.
  • No Chapter VIA Deduction Allowed.
  • No Section 54F Benefit
  • No Basic Exemption Allowed.
  • No 87A Rebate Allowed. [Cieculae 13/2025

About the Spending and Donations of Crypto

SPENDINGPURCHASING THROUG CRYPTO

  • Purchasing Through Crypto is treated as Transfer
  • Froy on the date of such spe spending is treated as sale consideration
  • FMV-COA = Gain will be Taxed @ 30% +SC+ Cess
  • Other Party may Deduct the TDS @ 1% OR 220%No PAN Case

DONATION THROUGH CRYPTO

  • If any Charity is don through Crypto.
  • It will be treated as Transfer.
  • FMV on the Date of transfer will be Sale Value
  • FMV-COA = Gain will be Taxed @30% + Sc+ Cess
  • Donation in kind is not allowed u/s 80G, So No Deduction of Donation in Crypto.
  • Double Loss – No Deduction and Tax at FMV-COA
  • Better to Liquidate Fiest and Then Donate.

Crypto Loss Treatment | Tax Neutral Crypto Transactions | Tax Treatment in Crypto Swapping

Loss Treatment Uls 115BBH

  • No Carry-Forward. Losses from VDA are not allowed to carry Forward to any AY

No Set-off of Losses

  • No Inter-Head Set-066 Allowed
  • No Intea-Head Set-off Allowed.
  • Set off only agaist same VDA is allowed.

Tax Neuteal Transactions

  • Acquision/Purchase of crypto has no tax impact
  • Holding of Crypto also have no Tax Implication.
  • Transfer beth Wallets is also Tax Neuteal.

Swapping of Crypto

  • Crypto to Crypto swapping is taxable.
  • It is called Barter Selling one buy Another.

Income-

FMV of Crypto Received xxx

EOA Of Crypto Given xxx

Gain / (Loss) = XXX

  • Gain will be taxed @30%
  • TDS will apply to Both the Parties.If through Exchage – Exchage will do TDS.

Crypto AirDrop’s Two Steps Taxation

AIR DROPS

Free Token’s are given to Create Awareness of new token’s.

Two Stage Taxation

  • stage 1 Ait Drop’s Received.
  • Receipt is treated as Gift and taxation of Gift Apply as it is.
  • Is treated as Income From Other Sources
  • FMV is conflidered as taxable
  • Taxable @ Slab Rates
  • Gift < 50,000/- is not taxable> 50,000/ Entice amount Taxable
  • Stage 2 – Subsequent Sale / Transfer
  • Taxable @30% Flat +SC+ cess
  • May be Taxed as CG OR PGBP
  • TDS @ 1% OR 20% May Apply
  • Disposion can be in the form of sale, Spending, Swapping, Donating etc.

Gift between Relatives is not taxable.

ITR Reporting in Crypto Transactions 3 Reporting Places in ITR

ITR REPORTING

  • Any Disposal of Crypto needs Mandatory Reporting in ITR.
  • ITR FOEMITR-2 Individual & HUF who show’s this as Capital Gains

ITR3: Coypto Income under PGBP

Reposting at 3 places

Schedule VDA ⇒ In this schedule we needto Report all the details regarding Crypto teansaction like Type of VDA, Date of sale, Date of purchase, Sale consideration etc.

Schedule AL This schedule becomeMandatory only if Income exceeds specified Limit (Currently > I Ce Income).If Income Excxceeds the limit then Heke also.

Schedule FA This schedule apply if wehold Crypto in Foreign Exchange. In this Situation Reporting hese is mandatory without any Income Limit.

Crypto Lending Two Layers Taxation in Crypto Lending

CRYPTO LENDING TAXATION

It is a DeFi Decentralised Finance Machanism where user Lend theie Crypto to Borrower’s through smaket Contract and earn Interest. (in Crypto Foem Only)

→ Stage 1 – Earning Interest

→Tax EventMovment Interest Token Received.

→ Tax HeadIncome From Other SOUECES, OR May be “PGBP”

→Valuation FMV on Receipt Date

– Tax RateApplicable Slab Rate.

– ITR Reporting -Mandatory

Stage 2 -Disposal of Edened Crypto

Tax Event – Date of Disposal.

Tax RateFlat @30% u/s 115BBH.

COA – FMV on the Date of Receipt.

Head of Income – “IFOS” OR “PGBP”

TDS – Will Apply Sec 1945

Disposion Mode – Can be Sale, Swapping, Spending, Donation, etc..