What is Schedule VDA?
Schedule VDA is a separate
disclosure block in the ITR forms (like ITR‑2) created for reporting income
from the transfer of Virtual Digital Assets such as cryptocurrencies, NFTs, and
other notified digital tokens. It captures transaction‑wise details so that tax
authorities can see your total sale value, cost, and profits from VDAs in a
structured way.
Under section 115BBH of the
Income‑tax Act, income from transfer of any VDA is taxed at a flat 30%,
irrespective of holding period or whether it is treated as capital gains or
business income. No deduction is allowed except the cost of acquisition, and
VDA losses cannot be set off against any other income or carried forward.
What counts as a Virtual
Digital Asset?
The term VDA covers a broad
range of digital instruments, not just popular crypto coins. The law treats the
following as Virtual Digital Assets for taxation and Schedule VDA reporting
purposes:
- Cryptocurrencies like Bitcoin, Ether, and
INR‑based tokens when used as tradable assets.
- Non‑fungible tokens (NFTs) and similar
unique digital collectibles notified by the government.
- Any other digital assets that the central
government notifies as VDA by official notification.
VDAs are distinct from central
bank digital currencies (CBDC) such as the e‑rupee, which are specifically
excluded from the VDA definition. However, if you trade between CBDC and a VDA
(for example, using e‑rupee to buy crypto), the crypto leg is still treated as
VDA for tax purposes.
Tax rules you must know before
filling Schedule VDA
Before entering numbers in the
ITR, it is important to understand how crypto and VDA income is taxed in India.
The key rules that impact Schedule VDA are:
- Flat 30% tax rate: Income from transfer of
VDAs is taxable at 30%, plus 4% health and education cess, and surcharge
where applicable.
- No expense deduction: You can only reduce
the sale value by the cost of acquisition; trading fees, platform charges,
and other expenses are not deductible.
- No loss set‑off or carry forward: Losses
from VDA transfers cannot be adjusted against salary, business, capital
gains, or even other VDA profits, and cannot be carried forward.
- 1% TDS under section 194S: On most crypto
trades above specified thresholds (typically ₹10,000/₹50,000 depending on
category of taxpayer), 1% TDS is deducted on the consideration, usually by
the exchange.
- Gifts also taxable: Gifts of VDAs above
₹50,000, when received without or for inadequate consideration, can be
taxed under section 56(2)(x) as income from other sources.
Because of these strict rules,
even small and frequent traders need an accurate transaction history to compute
total VDA income for Schedule VDA. Many exchanges and crypto tax tools now
provide India‑specific VDA tax reports that can plug directly into the ITR.
How Schedule VDA is structured
in ITR
In ITR‑2 and other applicable
forms, Schedule VDA appears as a separate table under the capital gains/other
income section. Although the exact layout can slightly change each year, the
core fields remain similar and must satisfy various validation rules in the e‑filing
portal.
A typical Schedule VDA row (or
transaction block) asks for the following details:
|
Field in Schedule
VDA |
What you need to
enter (blogger‑friendly explanation) |
|
Date of acquisition |
The date on which you bought
or otherwise acquired the VDA. |
|
Date of transfer |
The date on which you sold,
swapped, or spent the VDA. |
|
Type/Nature of VDA |
Crypto coin, token, NFT, or
other notified VDA; you may also specify symbol/name for clarity. |
|
Consideration (Sale value) –
Sl. No. 6 |
Total value received or
receivable on transfer in INR, including crypto‑to‑crypto trades converted at
fair market value. |
|
Cost of acquisition – Sl.
No. 5 |
What you originally paid (in
INR) to acquire that VDA, including previous purchase value for units sold. |
|
Income from transfer – Sl.
No. 7 |
Automatically validated as
Sale value minus Cost (Sl. 6 – Sl. 5) and must match the portal’s rule. |
|
TDS deducted u/s 194S |
Total TDS already deducted
on that transfer, as appearing in Form 26AS/Annual Information Statement. |
The system then totals all
positive income figures from the Schedule and pulls the amount into the main
“Income from transfer of Virtual Digital Assets” field in the capital gains or
special rate income section. This total becomes taxable at 30% under section
115BBH, separate from your other capital gains and income heads.
Step‑by‑step guide to filling
Schedule VDA in ITR
The following step sequence is
useful if you are filing ITR‑2 online and need to complete Schedule VDA for
crypto and NFT trades.
1. Collect
your crypto transaction report
·
Download the trade history CSV or tax report
from each exchange or wallet you used during the financial year.
·
Ensure you have INR conversion for crypto‑to‑crypto
trades, airdrops, and transfers, using exchange rates or tool‑generated values
for each date.
2. Segregate
what belongs in Schedule VDA
·
Include only transfer events: sell,
swap (VDA to VDA), spending crypto to buy goods/services, or gifting VDAs above
threshold where taxable.
·
Exclude mere deposits, withdrawals between your
own wallets, and on‑chain transfers that are not disposals; these do not count
as transfers for Schedule VDA.
3. Compute
transaction‑wise gain or loss
·
For each disposal, compute: Income = Sale value
in INR – Cost of acquisition in INR.
·
Keep a separate working sheet even for loss‑making
trades; although losses are not set off, the portal still expects full
disclosure of transfers.
4. Log in
to the Income Tax e‑Filing portal
·
Select the correct ITR form (commonly ITR‑2 for
individuals with capital gains and VDA income) and the applicable assessment
year.
·
Under the schedules list, opt‑in or tick Schedule
VDA so that it becomes visible for editing in the online interface.
5. Enter
details transaction‑wise (or grouped, if permitted)
·
Add rows for each category of VDA transaction
as per instructions; some taxpayers group similar trades done on the same day
and same platform if the form allows consolidated reporting.
·
Make sure that in every row, the figure at Sl.
No. 7 equals Sl. No. 6 minus Sl. No. 5, otherwise the validation rules will
give an error.
6. Match
TDS details with Form 26AS/AIS
·
Confirm that the TDS mentioned under section
194S in your tax reports matches what is auto‑populated from Form 26AS and AIS.
·
If an exchange has deducted TDS but it is not
showing, add the TDS entry under the relevant TDS schedule (such as TDS2) and
ensure it links to your PAN and VDA income.
7. Review
the capital gains section and total tax
·
Check the main capital gains or special‑rate
income section where the portal aggregates VDA income into a single figure
taxable at 30%.
·
Verify that your total tax computation
includes: 30% tax on VDA income, cess at 4%, and any surcharge depending on
total income.
8. Preview,
e‑verify, and retain working papers
·
Use the Preview Return option to ensure
Schedule VDA totals tie back to your own working and crypto tax tool outputs.
· After filing and e‑verification, keep your exchange statements, wallet records, and computation sheets safely for future assessments or queries.
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