India's Crypto Tax Stays at 30%, New VDA Reporting Rules Take Effect

India's new Virtual Digital Assets (VDA) framework has taken effect, but it does not change the existing crypto tax rules. The Income Tax Department's clarificatory note outlines the new regulations, which mandate new reporting requirements for prescribed entities.

The VDA definition includes cryptocurrencies, non-fungible tokens (NFTs), and other digital assets that represent value using cryptographically secured distributed ledger technology. However, some digital assets are excluded from this category, including Indian currency, Central Bank Digital Currency (CBDC), foreign currency, and notified digital assets.

Indian investors will still face a 30% tax on gains from crypto transactions, with an additional surcharge and cess. The rules also allow for only the cost of acquiring VDAs to be deducted while calculating taxable income, and losses cannot be set off against other income or carried forward to future years.

Additionally, prescribed reporting entities must provide information about certain crypto-related transactions to the Income Tax Department under Section 285BAA. This introduces an additional layer of compliance for these entities.