The new Income Tax Bill, set to be tabled on February 13, categorises virtual digital assets, commonly known as cryptocurrencies, as ‘undisclosed income’ during searches, alongside existing categories like gold and bullion, according to a report.
Under the new bill, ‘undisclosed income’ encompasses ‘money, bullion, jewellery, virtual digital assets, or other valuable articles’ as well as expenditures and income related to any entry or transaction that partially or wholly represents undisclosed income.
It also includes expense, exemption, deduction or allowance claimed under the Act and found to be incorrect, according to a Moneycontrol report, citing a copy of the Bill.
Virtual Digital Assets encompass any information, code, number, or token that is neither Indian nor foreign currency, created through cryptographic methods or otherwise, and can be transferred, stored, or traded electronically.
The tax bill explicitly includes non-fungible tokens (NFTs) and any other similar tokens, regardless of their name.
The new bill provides that Central Government may, by notification, exclude any digital asset from this definition, subject to specified conditions.
The new bill, as expected, has not made any changes to taxing cryptocurrencies or virtual digital assets, as it will continue to attract a 30 per cent tax on any income from the transfer of such assets without any deductions and exemptions. The one percent Tax Deducted at Source (TDS) on payments made for transfer of digital assets will continue to be imposed.
Since 2023, the Finance Ministry has been working on a discussion paper to seek comments and views from stakeholders on taxing VDAs. This paper will contain suggestions on the remit of regulation of cryptocurrencies in India.
With inputs from agencies
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Have crypto earnings? New Income Tax Bill will see it as ‘undisclosed income’ during searches
