VDA Taxation in Income Tax Bill 2025: Key Rules
Why in the news
The Income Tax Bill, 2025 gave crypto-type holdings a clear legal footing. It defines virtual digital assets (VDAs), classes them as property and capital assets, and tightens reporting, bringing India closer to global practice.
Key facts
- Definition (Section 2(111)): any information, code, number or token, other than Indian or foreign currency, generated by cryptographic or other means; it can be transferred, stored or traded electronically.
- An NFT or any similar token is expressly covered.
- Classification: property under Section 92(5)(f) and capital asset under Section 76(1), so gains are taxed much like property, shares or bonds.
- Flat 30% tax on income from transfer; only the cost of acquisition may be deducted.
- No deduction for mining costs, transaction fees or platform commissions.
- 1% TDS on every VDA transaction, peer-to-peer deals included.
- Exemption thresholds differ: ₹50,000 for small traders, ₹10,000 otherwise.
Global comparison
| Country | Status | Tax or regulator |
|---|---|---|
| U.K. | Property | Capital Gains Tax |
| U.S. | Securities | Falls under SEC rules |
| New Zealand | Property | Income tax on trading |
| UAE | Under VARA regulation | No personal income tax on some gains |
Compliance and reporting
- Non-disclosure of VDA holdings can be presumed undisclosed income (Section 301).
- Tax officers may seize VDAs under investigation, with cash, gold or property (Section 524(1)).
- Exchanges, wallet providers and traders must report transactions in the prescribed format (Section 509).
- VDAs must continue to appear in the Annual Information Statement (AIS).
Gaps that remain
- No investor-protection law.
- No standard market regulation.
- No effective mechanism against fraud.
Exam angle
- Remember the numbers: 30% tax, 1% TDS, Section 2(111).
- Classification: property and capital asset.
- Abbreviations: VDA, NFT, AIS, TDS, P2P, VARA, CGT.