A Commendable Beginning

The Indian government's proposal to tax and regulate Virtual Digital Assets (VDAs) under the Income Tax Bill, 2025 is a significant step towards recognising and managing digital assets like cryptocurrencies and NFTs in a streamlined manner.

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For the first time, VDAs in India may be classified as property and capital assets, bringing them under the scope of capital gains taxation. This simply means that profits from selling or transferring digital assets may be taxed just like real estate, stocks, or bonds.

The bill enforces a 30 per cent tax on income from VDA transfers, with no deductions allowed except for the cost of acquisition. This means that expenses like mining costs, transaction fees, and platform commissions cannot be deducted. Additionally, a 1 per cent TDS (Tax Deducted at Source) applies to all VDA transactions, extending even for peer-to-peer (P2P) transfers. These measures are aimed to make sure that all crypto transactions are tracked, eventually preventing tax evasion.