Section 115BBH → Section 123
Tax on income from virtual digital assets (Crypto/NFTs)
Quick Answer
Section 115BBH of the Income Tax Act, 1961 (Tax on income from virtual digital assets (Crypto/NFTs)) corresponds to Section 123 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 115BBH
The starting point is Section 115BBH of the Income Tax Act, 1961 — tax on income from virtual digital assets (crypto/nfts). Taxes income from the transfer of any Virtual Digital Asset (VDA) at a flat 30%. No deductions (except cost of acquisition) or loss set-offs are allowed.
From 1st April 2026, the same subject sits at Section 123 of the Income-tax Act, 2025 — retained and renumbered as Section 123 of the Income-tax Act, 2025. Retained. The strictest ring-fencing in the entire Act. VDA losses cannot be set off against any other income, nor can VDA profits absorb other business losses.
For Section 115BBH, the practical impact is rated Critical. Governs the entire cryptocurrency and Web3 taxation landscape in India.
Sec 115BBH
Provision Summary
Taxes income from the transfer of any Virtual Digital Asset (VDA) at a flat 30%. No deductions (except cost of acquisition) or loss set-offs are allowed.
Sec 123
Provision Summary
Retained. The strictest ring-fencing in the entire Act. VDA losses cannot be set off against any other income, nor can VDA profits absorb other business losses.
Key Changes & Highlights
- Infrastructure costs (like mining rigs) are explicitly denied as a 'cost of acquisition'.
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Frequently Asked Questions
What is Section 115BBH of the Income Tax Act, 1961 about?
Section 115BBH of the Income Tax Act, 1961 covers tax on income from virtual digital assets (crypto/nfts). Taxes income from the transfer of any Virtual Digital Asset (VDA) at a flat 30%. No deductions (except cost of acquisition) or loss set-offs are allowed.
Which section replaces Section 115BBH in the Income-tax Act, 2025?
Section 115BBH of the Income Tax Act, 1961 maps to Section 123 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained. The strictest ring-fencing in the entire Act. VDA losses cannot be set off against any other income, nor can VDA profits absorb other business losses.
What is the impact of the change to Section 115BBH under the new tax code?
The transition impact for Section 115BBH is rated Critical. Governs the entire cryptocurrency and Web3 taxation landscape in India.
What should I watch out for when Section 115BBH moves to the 2025 code?
Infrastructure costs (like mining rigs) are explicitly denied as a 'cost of acquisition'. These points are specific to Section 115BBH (Tax on income from virtual digital assets (Crypto/NFTs)).
Disclaimer: This mapping of Section 115BBH (Tax on income from virtual digital assets (Crypto/NFTs)) to Section 123 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 115BBH is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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