Virtual Digital Asset (VDA) covers cryptocurrencies, Non-Fungible Tokens (NFTs), and any other notified digital asset. It does not cover Indian currency, CBDCs, Foreign currency, and notified digital assets. If you generate any income from the transfer of VDAs, it must be reported in Schedule VDA in the ITR form. The income generated from the transfer of virtual digital assets will be subject to taxation at a rate of 30% and applicable surcharge and cess. It is important to note that you cannot avail deductions for any expenses, except for the cost of acquisition, if applicable, when calculating such income.
Schedule VDA requires details such as the acquisition date, transfer date, category of income for taxation, acquisition cost in case of a gift, and consideration received. If you have income from VDA, you cannot file ITR-1 or ITR-4. Instead, such income can be reported in ITR 2 or ITR 3. Such income can be taxed either under the head of business income or capital gains.