VDAs as Property and Capital Assets
The Income Tax Bill, 2025 treats Virtual Digital Assets (VDAs), including cryptocurrencies and NFTs, as property and capital assets.
Any gains from the sale, transfer, or exchange of VDAs will be subject to capital gains tax, similar to real estate, stocks, and bonds.
Expenses related to mining, transaction fees, and platform commissions cannot be deducted from taxable income, making the tax regime stricter than other countries.
Taxation and TDS on VDAs
A flat 30% tax is imposed on profits from VDA transfers, regardless of the holding period, aligning with the U.K. and other countries’ crypto taxation systems.
A 1% Tax Deducted at Source (TDS) applies to all VDA transactions, including peer-to-peer trades, ensuring the government tracks high-value crypto exchanges.
Small traders can be exempted from TDS if their total transactions fall below the ₹50,000 (₹10,000 for others) threshold.
Reporting and Seizure of VDAs
VDAs must be reported in income tax filings. If unreported, they may be classified as undisclosed income and subject to higher taxes.
Tax authorities can seize VDAs during investigations, similar to how physical assets like cash or gold are treated.
Platforms dealing in crypto must report transactions, creating a more transparent and accountable crypto ecosystem.
Global Alignment and Regulatory Gaps
India’s approach to VDAs aligns with global practices, such as the U.S. SEC treating many crypto assets as securities and the U.K. recognizing them as property for tax purposes.
Despite these advancements, India still lacks a comprehensive regulatory framework to address investor protection, market regulation, and enforcement, leaving room for improvement.
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