The new Income Tax Bill, 2025, introduced in Parliament by Finance Minister Nirmala Sitharaman on Thursday, has not altered the scope of "virtual digital assets" (VDAs) but has incorporated the definition proposed in the Finance Bill, 2025.
Clarification by the Income Tax Department
The income tax department, in its newly released Frequently Asked Questions (FAQ) on the Bill, confirmed that there is no change in the scope of virtual digital assets beyond what was already proposed in the Finance Bill, 2025.
"The Income Tax Bill, 2025, contains all amendments proposed in the Finance Bill, 2025. Users are advised to compare the provisions of the Income Tax Act, 1961, as updated with proposed amendments in the Finance Bill, 2025, while reading the Income Tax Bill, 2025," the FAQ stated.
Expanded Definition of Virtual Digital Assets
The Finance Bill, 2025, had proposed an amendment to the definition of VDAs to explicitly include crypto assets - any digital representation of value that relies on cryptographically secured distributed ledger technology (DLT) or similar mechanisms to validate and secure transactions. This expanded definition aims to align with global reporting norms and strengthen compliance requirements in the sector.
Additionally, the amendment will take effect from April 1, 2026, as part of the proposed new crypto asset reporting framework.
Crypto in Search & Seizure Proceedings
The new Bill also expands the definition of 'undisclosed income' for the purpose of search and seizure proceedings, now explicitly including virtual digital assets. This move aims to tighten tax enforcement and prevent tax evasion through crypto holdings.
Alignment with Global Crypto Regulations
Experts highlight that the redefined scope of VDAs seeks to align India's tax laws with the Crypto-Asset Reporting Framework (CARF) designed by the Organisation for Economic Co-operation and Development (OECD).
What Lies Ahead?
With the new tax law set to take effect from April 1, 2026, industry stakeholders will be closely watching the regulatory framework's implementation and its impact on India's crypto ecosystem, digital asset taxation, and compliance requirements. The formalization of crypto-related tax norms is expected to bring clarity, reduce disputes, and foster a more regulated environment for digital assets in India.
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