From which assessment year does the flat 30% charge on crypto actually begin, and has the Board itself said anything about set-off?
Assessment year 2023-24, that is financial year 2022-23. Paragraph 6 of the Board's Explanatory Notes to the Finance Act 2022 records that the s.115BBH amendment "takes effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years". The same paragraph restates the set-off bar in the Board's own words - no set off of any loss arising from transfer of a virtual digital asset against any income computed under any provision of the Act, and no carry forward. The 1% under s.194S is separately recorded as effective from 1st July, 2022.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Tax Policy and Legislation Division, Department of Revenue, Ministry of Finance) on 2022-11-03, reported as Circular No. 23/2022 dated 3rd November, 2022, F. No. 370142/48/2022-TPL. It bears on section 115BBH, section 194S, section 2(47A) of the Income Tax Act 1961, in Crypto & Virtual Digital Assets and How Tax Law Is Read matters.
The start date decides whether a year can be assessed under the special regime at all. A notice that applies the 30% charge, the no-deduction rule and the no-set-off rule to FY 2021-22 or earlier is applying a provision that did not exist for that year, and the Board's own document is the cleanest thing to put in front of the officer - better than a commentary, and better than an argument about what "with effect from the 1st day of April, 2023" means. It also matters the other way: for FY 2022-23 onwards there is no argument that the regime had not started.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The Finance Act 2022 inserted s.115BBH and s.194S. The Board issued its Explanatory Notes to the provisions of that Act on 3 November 2022. Paragraph 6, headed "Scheme for taxation of virtual digital assets", sets out the charge: where total income includes income from transfer of a virtual digital asset, the tax is 30% on that income plus the tax on the balance of total income computed as if the virtual digital asset income were excluded. The paragraph then records the deduction and set-off restrictions and the date from which the amendment operates. Section 194S is dealt with separately and its own effective date is given.
The s.115BBH amendment takes effect from 1 April 2023 and applies in relation to assessment year 2023-24 and subsequent assessment years. The s.194S amendment is effective from 1 July 2022.
An explanatory note does not reason; it records. What it gives a practitioner is the department's own statement of commencement in terms of assessment year rather than in terms of the bare "with effect from" date, which is where arguments about the first year usually start. The set-off sentence is written in the same terms as the sub-section - "any income computed under any provision of the Act" - so the Board's language is as wide as the statute's and no wider.
This amendment takes effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years.
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Handle my notice → Ask a CA on WhatsAppAssessment year 2023-24, that is financial year 2022-23. Paragraph 6 of the Board's Explanatory Notes to the Finance Act 2022 records that the s.115BBH amendment "takes effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years". The same paragraph restates the set-off bar in the Board's own words - no set off of any loss arising from transfer of a virtual digital asset against any income computed under any provision of the Act, and no carry forward. The 1% under s.194S is separately recorded as effective from 1st July, 2022. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Tax Policy and Legislation Division, Department of Revenue, Ministry of Finance) and bears on section 115BBH, section 194S, section 2(47A) of the Income Tax Act 1961. It is reported as Circular No. 23/2022 dated 3rd November, 2022, F. No. 370142/48/2022-TPL. The start date decides whether a year can be assessed under the special regime at all. A notice that applies the 30% charge, the no-deduction rule and the no-set-off rule to FY 2021-22 or earlier is applying a provision that did not exist for that year, and the Board's own document is the cleanest thing to put in front of the officer - better than a commentary, and better than an argument about what "with effect from the 1st day of April, 2023" means. It also matters the other way: for FY 2022-23 onwards there is no argument that the regime had not started. If it applies to you, the first step is this: Check the year in the notice against the circular before answering anything on rate: s.115BBH governs AY 2023-24 onwards, so FY 2021-22 and earlier are outside it.
The Finance Act 2022 inserted s.115BBH and s.194S. The Board issued its Explanatory Notes to the provisions of that Act on 3 November 2022. Paragraph 6, headed "Scheme for taxation of virtual digital assets", sets out the charge: where total income includes income from transfer of a virtual digital asset, the tax is 30% on that income plus the tax on the balance of total income computed as if the virtual digital asset income were excluded. The paragraph then records the deduction and set-off restrictions and the date from which the amendment operates. Section 194S is dealt with separately and its own effective date is given. The matter was decided on 2022-11-03 by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Tax Policy and Legislation Division, Department of Revenue, Ministry of Finance). On those facts the CBDT Circulars & Instructions held as follows. The s.115BBH amendment takes effect from 1 April 2023 and applies in relation to assessment year 2023-24 and subsequent assessment years. The s.194S amendment is effective from 1 July 2022.
An explanatory note does not reason; it records. What it gives a practitioner is the department's own statement of commencement in terms of assessment year rather than in terms of the bare "with effect from" date, which is where arguments about the first year usually start. The set-off sentence is written in the same terms as the sub-section - "any income computed under any provision of the Act" - so the Board's language is as wide as the statute's and no wider. In the words reproduced by the source cited on this page: "This amendment takes effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years."
It was decided by the CBDT Circulars & Instructions on 2022-11-03 and is reported as Circular No. 23/2022 dated 3rd November, 2022, F. No. 370142/48/2022-TPL. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 115BBH, section 194S, section 2(47A), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The s.115BBH amendment takes effect from 1 April 2023 and applies in relation to assessment year 2023-24 and subsequent assessment years. The s.194S amendment is effective from 1 July 2022. It arises in Crypto & Virtual Digital Assets and How Tax Law Is Read matters, on section 115BBH, section 194S, section 2(47A) of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes, Tax Policy and Legislation Division, Department of Revenue, Ministry of Finance. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where an earlier year is being assessed on crypto, argue the head and the computation under the ordinary provisions and cite this paragraph for the proposition that the special charge had not commenced. Keep the s.194S date separate - the withholding obligation runs from 1st July, 2022, on financial years, and does not move with the charging provision's assessment year. Attach the paragraph itself rather than a summary of it, because the sentence on effect is the whole point.
Still good law. The circular is on the Board's own site and the same text is carried by an independent commentary host under the same number, date and file number. No withdrawal or supersession was traced. It speaks only to the Finance Act 2022; later Finance Acts changed the definition in s.2(47A) and brought virtual digital assets into block assessment, and this document does not cover any of that. That finding was checked against a published source, which is linked on this page, on 2026-08-23. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is the Board's explanation of the Finance Act 2022, not a decision and not the Act. It restates s.115BBH; it does not interpret it. In particular it does not say whether a loss on one virtual digital asset may be set against a gain on another in the same year - it repeats the statutory formula "against any income computed under any provision of the Act" and stops there. Nothing in the paragraph deals with cost of acquisition, with swaps, or with how an officer should treat a gross consideration figure. The circular predates the Finance Act 2025 changes to the definition and to block assessment. It does not tell you whether a loss on one coin may be set against a gain on another in the same year, and it does not deal with cost of acquisition, with crypto-for-crypto swaps, or with offshore platforms. It says nothing about how a gross consideration figure reported by an exchange is to be treated in an assessment. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The s.115BBH amendment takes effect from 1 April 2023 and applies in relation to assessment year 2023-24 and subsequent assessment years. The s.194S amendment is effective from 1 July 2022.
TaxSphere, “CBDT Circular 23/2022 - the VDA regime's first year”, https://taxnotice.vittsphere.com/caselaw/case/cbdt-circular-23-2022-vda-115bbh-first-year/ (validity last checked 2026-08-23)
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