The definition of “virtual digital assets” (VDAs) has been expanded in the new Income-Tax Bill. It will now include “any crypto-asset” it said, as these are digital representation of value that relies on a cryptographically secured distributed ledger.
The definition of ‘undisclosed income’ for the purpose of search and seizure proceedings, has been widened to include VDAs. These changes were announced in the 2025 union budget.
However, there are no changes with respect to VDAs in the Income Tax Bill, 2025.
The definition of VDAs is sought to be extended to align with the definition of Crytpo Assets in the Crypto-Asset Reporting Framework (CARF) designed by the OECD. The intention appears to incline towards the continuous attempt to capture the wide array of innovative digital assets such as utility tokens, security tokens, crypt derivates etc, which have been masquerading their way into this ever evolving yet not formally regulated sector in India.
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In an attempt to allay the current shortcoming faced by the Government due to lack of a robust regulatory framework to track activities in the crypto space, the Finance Bill 2025 proposes to introduce the obligation of reporting of such crypto-assets in a statement akin to Statement of Financial Transactions. Notification of rules corresponding to this reporting requirement would unveil contours around the reporting entity on whom the obligation is cast, the depth of information sought, and monetary thresholds if any.
Non-disclosure of income from VDAs under the regime introduced in the Finance Act, 2022 could expose the taxpayer to search proceedings.
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