What is Section 115BBH?

What is Section 115BBH?

Section 115BBH – Tax on Virtual Digital Assets (VDAs like Crypto, NFTs, etc.)

  1. Flat 30% Tax
    • Any income you earn from transferring (selling, swapping, or spending) a Virtual Digital Asset (VDA)—like cryptocurrency, NFTs, etc.—is taxed at a flat rate of 30%.
    • This tax applies no matter what your income slab is.
  2. No Deductions Allowed
    • You cannot claim any expenses (like mining cost, trading fees, electricity, etc.) as deductions.
    • The only thing you can reduce is the cost of buying the asset (purchase price).
  3. No Set-off of Losses
    • If you make a loss in crypto, you cannot adjust it against other income (like salary, business, or even other crypto gains).
    • Loss from one VDA cannot be used to reduce profit from another VDA.
  4. No Carry Forward of Losses
    • Losses from VDAs cannot be carried forward to future years.
  5. Gift Tax Applies
    • If you receive a VDA (like Bitcoin or NFT) as a gift, its value is taxed in your hands as “Income from Other Sources,” unless specifically exempt.

✅ In short:
Profits from crypto and digital assets are taxed at 30% flat, with no deductions, no set-offs, and no carry forward of losses. Even gifts of crypto are taxable.

👍 Let’s take a clear example for Section 115BBH:

Example—How Section 115BBH Works

👩‍💻 Suppose Riya buys 1 Bitcoin for ₹10,00,000.
Later, she sells it for ₹15,00,000.

  • Profit = 15,00,000 – 10,00,000 = ₹5,00,000
  • Tax @ 30% = ₹1,50,000
  • Plus 4% cess = ₹6,000
  • Total tax = ₹1,56,000

👉 Riya’s net take-home = ₹13,44,000 (after paying tax).

Now see what is not allowed:

  1. No expense deduction
    • If Riya paid ₹50,000 as trading fees/mining cost → not allowed.
  2. No set-off of losses
    • Suppose she lost ₹2,00,000 on Ethereum in the same year → she cannot adjust it against her Bitcoin profit.
    • She still pays full tax on the ₹5,00,000 profit.
  3. No carry forward
    • If she made a ₹2,00,000 loss this year and no profit → she cannot carry it forward to next year.
  4. Gifts are taxable
    • If Riya’s friend gifts her 1 NFT worth ₹1,00,000 → it is treated as income and taxed (unless received from a relative or in exempt situations).

✅ In short:

  • Flat 30% tax on gains.
  • Only purchase cost is allowed as deduction.
  • No set-off, no carry forward of losses.
  • Gifts are taxable.