Income Tax Act 2025: What crypto investors should know about VDA provisions, TDS and ITR filing rules — SkimNews
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- India's Income-tax Act 2025 takes effect April 1, 2026, restating existing crypto tax provisions under new section numbers — the 30% flat tax on VDA gains, 1% TDS, and the no-set-off/no-carry-forward rules all carry forward, per KoinX's Punit Agarwal
- Section 2(111) of the new Act explicitly defines crypto-assets as Virtual Digital Assets, and Section 509 introduces a dedicated reporting framework requiring exchanges, brokers, dealers and custodial platforms to file annual transaction-level reports via Form 167 starting with calendar-year 2026 transactions, with first filings expected in 2027
- Section 509 reporting covers crypto-to-crypto trades, crypto-to-fiat conversions and transfers to external or personal wallets — but activity after assets leave an exchange has no reporting trail, a gap investors "under-document because it doesn't feel like a taxable event," per Agarwal
- The 1% TDS provision now falls under Section 393(1), and "Tax Year" replaces "Assessment Year" and "Previous Year"; TDS remains an advance tax credit, not an additional levy, per Mudrex's Prateek Gupta
- Deductible costs are limited to the VDA acquisition price only — trading fees, platform charges, advisory expenses, and losses from other VDAs cannot be deducted, set off against other income, or carried forward, per WazirX's Rajagopal Menon
- "Virtual digital space" — distinct from VDAs — covers digital environments like online investment accounts, emails and cloud records that tax authorities may access during proceedings under Sections 247 and 261; these locations are not themselves taxable assets, per CoinSwitch's Siva Venkataraman
Why it matters: For India's crypto investors, the April 2026 transition is administrative rather than substantive — the tax math is unchanged — but Section 509's new exchange-level reporting creates a transaction audit trail covering crypto-to-crypto and wallet transfers, shifting future enforcement risk onto personal-wallet activity that currently sits outside any visibility framework.
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