Virtual digital asset (VDA)

"Virtual digital asset" is the legal term Indian tax law uses for crypto assets. The Finance Act 2022 inserted the definition into the Income-tax Act, 1961 as section 2(47A), and the Income-tax Act, 2025 carries it forward. It broadly covers any information, code, number or token generated through cryptographic or similar means that provides a digital representation of value and can be transferred, stored or traded electronically. Non-fungible tokens are included, and the government can notify other assets to include or exclude.

Indian rupees and foreign currency are excluded. CBDT Notification 74/2022 also excludes gift cards and vouchers, reward or loyalty points, and website or app subscriptions, and Notification 75/2022 excludes NFTs whose transfer legally transfers ownership of an underlying tangible asset. Bitcoin, ether, stablecoins, most other tokens and most NFTs are VDAs.

The VDA label determines the tax treatment: a flat 30% on income from transfers plus cess, deduction only for cost of acquisition, no set-off of losses, and 1% TDS on transfers above thresholds.