Income Tax Bill 2025 Retains Virtual Digital Asset Definition

The Income Tax Bill 2025, introduced in Parliament on Thursday by Finance Minister Nirmala Sitharaman, maintains the existing scope of “virtual digital assets” while incorporating the definition outlined in the Finance Bill 2025.

A clarification issued by the Income Tax Department through a frequently asked questions (FAQ) document confirmed that the bill includes all amendments proposed in the Finance Bill 2025. 

Taxpayers were advised to review the updated provisions of the Income Tax Act, 1961, alongside these amendments for a comprehensive understanding.

“The Income Tax Bill 2025 incorporates all modifications introduced in the Finance Bill 2025. Consequently, there is no alteration in the scope of ‘virtual digital assets’ under the new tax framework,” the department stated.

The Finance Bill 2025 introduced a revised definition of virtual digital assets to include any crypto asset representing value, secured through cryptographic technology and validated on a distributed ledger system. 

This revision, part of a broader regulatory framework for crypto asset reporting, will take effect from April 1, 2026.

Additionally, the definition of “undisclosed income” in the context of search and seizure proceedings has been expanded to cover virtual digital assets, strengthening tax enforcement measures.

Experts note that the proposed definition aligns India’s tax treatment of crypto assets with international regulatory standards. Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, pointed out that the changes mirror the Crypto-Asset Reporting Framework (CARF) introduced by the Organisation for Economic Co-operation and Development (OECD).

Vikram Subburaj, CEO of Giottus Crypto Platform, welcomed the development, emphasizing that clearer definitions and structured reporting frameworks could foster regulatory certainty. “A well-defined taxation and compliance structure will enable India to advance in the areas of tokenized assets, decentralized finance (DeFi), and Web3 innovation,” he said.

The new income tax framework is expected to shape India’s approach to digital asset taxation while ensuring compliance with evolving global financial regulations.