Union Budget 2025-26 (Full) + Finance Bill, 2025

E. TAX ADMINISTRATION

I. Obligation to furnish information in respect of crypto-asset

Vide Finance Act 2022, taxation of virtual digital assets (VDA) has been introduced in the Income-tax Act, 1961 (‘the Act’), under section 115BBH of the Act in which the transfer of VDA is to be taxed at the rate of 30% with no deduction in respect of expenditure (other than cost of acquisition) to be allowed. To define VDA, Clause (47A) was inserted in section 2 of the Act. Further, to capture VDA transaction details, section 194S has been inserted in the Act 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.

2. It is now proposed to insert section 285BAA in the Act, being the Obligation to furnish information of crypto-asset, wherein –

(I) 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;

(II) Sub-section (2) of said section states that where prescribed income-tax authority considers that the statement furnished is defective, he may intimate the defect to the person who has furnished such statement and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or such further period as may be allowed, and if the defect is not rectified within the aforesaid period allowed, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement;

(III) Sub-section (3) of said section states that where a person who is required to furnish a statement has not furnished the same within the specified time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such statement within a given time period and he shall furnish the statement within the time specified in the notice;

(IV) Sub-section (4) of said section states that if any person, having furnished a statement, or in pursuance of a notice issued, comes to know or discovers any inaccuracy in the information provided in the statement, he shall within a given period inform the income-tax authority, the inaccuracy in such statement and furnish the correct information in such manner as prescribed;

(V) Sub-section (5) of said section states that the Central Government may, by rules specify the persons to be registered with the prescribed income-tax authority, the nature of information and the manner in which such information shall be maintained by the persons and the due diligence to be carried out by such persons for the purpose of identification of any crypto-asset user or owner;

3. 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.

4. These amendments will take effect from the 1st day of April, 2026.

[Clauses 3 & 85]

 

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Full Text:

Union Budget 2025-26 (Full) + Finance Bill, 2025

Obligation to furnish crypto-asset transaction information: reporting entities must file prescribed statements and correct defects promptly. Proposed section 285BAA mandates that prescribed reporting entities furnish statements of crypto-asset transactions to the prescribed income-tax authority in prescribed form, manner and time, allows the authority to intimate defects and permit rectification within a prescribed period, treats unrectified defects as inaccurate information, enables issuance of notices to require late filers to submit statements, requires disclosure and correction of discovered inaccuracies, and empowers the Central Government to prescribe registration, information maintenance, and due diligence obligations for identification of crypto-asset users or owners; the virtual digital asset definition is also expanded to include crypto-assets relying on cryptographically secured distributed ledgers.