The government has proposed to bring in amendments to make it compulsory for entities such as crypto exchanges to furnish information about a transaction in crypto assets.
The Union Budget 2025 also proposed to align the definition of Virtual Digital Assets (VDA), which may include non-fungible assets. In the Finance Act 2022, taxation of VDA was introduced under the Income-tax Act. As per Section 115BBH, transfer (sale or buying) of VDA was taxed at the rate of 30% with no deduction in respect of expenditure (other than cost of acquisition) to be allowed.
Further, to capture VDA transaction details, section 194S was inserted to provide for deduction of tax on payment for transfer of VDA at the rate of 1% of transaction value, including cases where the transaction occurs in kind or partly in cash.
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The government has now proposed to insert section 285BAA in the Act, which make it compulsory to furnish transaction information of crypto assets.
“Sub-section (1) of section 285BAA of the Act states any person, being a reporting entity, as may be prescribed, in respect of crypto asset, shall furnish information in respect of a transaction in such crypto asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority, as may be prescribed,” the 2025-26 Finance Bill said.
It is also proposed to amend clause (47A) of section 2 to insert sub-clause (d) which states that the definition of virtual digital asset also includes any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not already included in the definition of virtual digital asset or not.
Shivam Thakral, CEO of BuyUcoin welcome the proposed amendment to enhance transparency in the crypto-asset sector.
“The obligation for prescribed reporting entities to furnish detailed transaction information is a significant step toward establishing a robust regulatory framework for virtual digital assets (VDAs),” he said.
“This initiative aligns with global standards and emphasizes the importance of accountability within the industry. By refining the definition of VDAs, the government is taking a crucial step toward creating a clear and structured framework that can foster innovation while ensuring investor protection,” Thakral added.
Already, entities such as Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL) share investment details on stocks, mutual funds and fixed income with the government. The information is then compiled under the Annual Information System, providing detailed information regarding a taxpayer’s financial transactions during a financial year. This AIS includes TDS/TCS details, Stock Market transactions, Mutual Fund transactions and many more.
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