Digital economy · Crypto
Crypto losses: no set-off, no carry forward
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Facts
Sec 194, Income-tax Act 2025 (old Sec 115BBH(2)(b)) explicitly prohibits setting off losses from VDA against any other income. This is unique to crypto, no other asset class has this restriction.
Provisions and law
- IT Act, Sec 194 (old 115BBH(2)(b)) | Explicit prohibition
Analysis
Implications: If you made ₹5L profit on BTC and ₹3L loss on LUNA: Tax = 30% × ₹5L = ₹1.5L. The ₹3L loss is wasted, it cannot reduce your ₹5L gain. Also cannot carry the ₹3L loss forward to next year. Within-VDA set-off: CBDT has not clarified whether you can set off losses on one VDA against gains on another VDA in the same year. The conservative reading (and most advisors') is that you cannot, each VDA is treated separately. Some aggressive interpretations allow within-VDA set-off. Wait for further CBDT guidance.
Conclusion
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A Savvy can do this for you
Capital loss set-off and carry forward with a timely return, Sec 108, 109, 111, 121 (old 70, 71, 74 and 80)
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