The new Income Tax Bill, 2025, targets cryptocurrencies by classifying them as ‘undisclosed income’ during tax searches. Scheduled for introduction in Parliament on February 13, 2025, the bill defines ‘virtual digital assets’ (VDAs) as information, code, numbers, or tokens generated through cryptographic means or otherwise. This definition includes cryptocurrencies and non-fungible tokens (NFTs).
The bill retains the 30% tax rate on income from VDAs, excluding any deductions. Additionally, it mandates a 1% Tax Deducted at Source (TDS) on transactions involving VDAs. The bill requires entities dealing in crypto-assets to report transaction details to tax authorities, ensuring enhanced compliance and oversight.
By expanding the definition of undisclosed income to include VDAs, the bill aims to provide a clearer regulatory framework for the taxation of digital assets. This move reflects the government’s efforts to regulate the growing crypto market and ensure tax compliance. The bill’s provisions are expected to impact crypto investors and traders by subjecting their earnings to stricter scrutiny and taxation.
