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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products

Ms. Kavya incurred a loss of Rs 80,000 on selling a virtual digital asset (VDA) in a year when she also earned Rs 1,20,000 gain on selling a different VDA. Under the Indian Income-tax Act, which statement about the tax treatment of her VDA transactions is correct?

VDA losses cannot be set off against any other income, even gains on other VDAs, and cannot be carried forward. VDA gains are taxed at a flat 30% with only the cost of acquisition allowed as a deduction, so Kavya gets no relief for her loss.

  1. AThe loss can be set off against the gain on the other VDA and the net gain taxed at slab rates
  2. BThe loss can be set off against salary income but not against other VDA gains
  3. CThe loss cannot be set off against any other income, including gains on other VDAs, and cannot be carried forwardCorrect
  4. DThe loss can be carried forward for eight years against future VDA gains

Explanation

Gains from transfer of VDAs are taxed at a flat 30% with no deduction other than the cost of acquisition. Losses on a VDA cannot be set off against any other income, including gains from another VDA, and cannot be carried forward. So Kavya is taxed on the Rs 1,20,000 gain without relief for the Rs 80,000 loss.

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