Crypto to be considered as 'undisclosed income' in new Income Tax Bill

Apart from the existing ones such as gold and bullion, the new Income Tax Bill set to be tabled on Feb 13 has included virtual digital assets — also called cryptocurrencies — in the category of 'undisclosed income' during searches.

The new bill expectedly has not made any changes to taxing cryptocurrencies as it will continue to attract a 30 % tax on any income from the transfer of such assets without any deductions and exemptions.

The one % Tax Deducted at Source (TDS) on payments made for the transfer of digital assets will continue to be imposed.

The new bill provides that the union government may, by notification, exclude any digital asset from this definition, subject to specified conditions.

Undisclosed income includes “money, bullion, jewelry, virtual digital asset or other valuable article” or expenditure, income based on any entry or transaction, where such entry wholly or partly represents income which has not been disclosed, per the new tax bill.

It also includes expense, exemption, deduction, or allowance claimed under the Act and found to be incorrect, Moneycontrol reported citing a copy of the Bill accessed by it.

The tax bill specifically includes a non-fungible token, or NFT, and any other token of similar nature, by whatever name is called, according to the report.

Pertinently, the Finance Ministry has been working on a discussion paper to seek comments and views from stakeholders on taxing Versatile Data Acquisition Systems (VDAs) since 2023. This paper will contain suggestions on the remit of regulation of cryptocurrencies in India.