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EY Update
Certain items like gift cards, mileage points, web subscriptions etc. have been excluded from the scope of definition of 'virtual digital assets'. Further, the government has notified 'token' which meets the definition of VDA as non-fungible token but excludes NFTs representing ownership of underlying tangible assets from the scope of definition of VDA.
The Finance Act, 2022 introduced a separate scheme of taxation of income arising from transfer of VDA under Income Tax Laws . For this purpose, the term VDA is defined widely under three limbs.
The first limb covers any information or code or number or token (not being Indian currency or foreign currency) which meets certain conditions.
The second limb covers NFT or any other token of similar nature, by whatever name called, but NFT itself is defined to mean such digital asset as the central government may, by notification in the official gazette, specify.
The third limb covers any other digital asset, as the central government may, by notification in the official gazette, specify.
The definition further authorizes the government to issue notification to exclude any digital asset from the definition of VDA, subject to such conditions as may be prescribed therein.
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