Virtual Digital Asset - Definition / Legal Terminology - Income Tax

As per Section 2(47A) of the Income-tax Act, 1961 - Virtual Digital Assets means - (a) any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically; (b) a non-fungible token or any other token of similar nature, by whatever name called; (c) any other digital asset, as the Central Government may, by notification in the Official Gazette specify: (d) 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 such asset is included in sub-clause (a) or sub-clause (b) or sub-clause (c): [ Inserted vide Section 3 of the Finance Act, 2025 W.e.f. 01.04.2026 ] Provided that the Central Government may, by notification in the Official Gazette, exclude any digital asset from the definition of virtual digital asset subject to such conditions as may be specified therein. [ Section 2(47A) ] Explanation .- For the purposes of this clause,- (a) non-fungible token means such digital asset as the Central Government may, by notification in the Official Gazette, specify; (b) the expressions currency , foreign currency and Indian currency shall have the same meanings as respectively assigned to them in clauses (h), (m) and (q) of section 2 of the Foreign Exchange Management Act, 1999 . Note:- The following virtual digital assets w hich shall be excluded from the definition of virtual digital asset:- Gift Card or vouchers , being a record that may be used to obtain goods or services or a discount on goods or services; Mileage points, reward points or loyalty card, being a record given without direct monetary consideration under an award, reward, benefit, loyalty, incentive, rebate or promotional program that may be used or redeemed only to obtain goods or services or a discount on goods or services; Subscription to websites or platforms or application. [ Notification No. 74/2022 dated 30.06.2022 ] A token which qualifies to be a virtual digital asset as non-fungible token within the meaning of sub-clause (a) of clause (47A) of section 2 of the Act but shall not include a non-fungible token whose transfer results in transfer of ownership of underlying tangible asset and the transfer of ownership of such underlying tangible asset is legally enforceable. [ Notification No. 75/2022 dated 30.06.2022 ]