Development in the taxation of income arising from the transfer of virtual digital assets (VDAs) : Clause 194 (Table: S. No. 4) of Income Tax Bill, 2025 Vs. Section 115BBH of Income Tax Act, 1961

Taxation of virtual digital assets: flat rate plus denial of loss relief reshapes compliance and reporting obligations.

Clause 194 (Table: S. No. 4) creates a dedicated tax regime for income from transfer of virtual digital assets, applying to any person and taxing such income at a flat rate while allowing only the cost of acquisition as a deduction. All other expenses, allowances, set offs and carry forwards of losses from VDA transfers are disallowed. The statutory definition of 'transfer' applies to VDAs irrespective of capital asset status, requiring segregation of VDA income in tax computation and imposing enhanced record keeping and compliance obligations.