The Centre is all set to introduce the new Income Tax Bill 2025 to replace the existing Income Tax Act of 1961. This significant tax reform is aimed at streamlining the complex tax filing process, albeit with stricter regulations, particularly concerning crypto assets and digital transactions. One of the key amendments in the bill is the classification of undisclosed crypto assets as ‘undisclosed income’.
According to the proposed tax legislation, "undisclosed income" encompasses any form of valuable assets such as money, bullion, jewellery, virtual digital assets, or other valuable items. It also includes any expenditure or income derived from any transaction or entry that represents undisclosed income, wholly or partially.
How much tax do I have to pay? Calculate now
This means that individuals who hold crypto assets but fail to disclose them will face penalties similar to those for undisclosed gold, jewellery, or cash holdings.
Undisclosed crypto assets may be considered as tax evasion, profits from undeclared NFTs and crypto trading will be subject to taxation, and submitting false tax claims in relation to crypto could result in penalties.
Virtual Digital Assets are defined as any form of information, code, number, or token that is generated through cryptographic methods or other means, and is not considered an Indian or foreign currency. These assets can be electronically transferred, stored, or traded.
The tax bill now includes provisions for non-fungible tokens (NFTs) and similar digital assets, which may be designated by the Central Government through a notification, with certain conditions.
Despite the new bill, there have been no changes to the taxation of cryptocurrencies and virtual assets. They will still be subject to a 30% tax on any income from their transfer, without any deductions or exemptions. Additionally, the 1% Tax Deducted at Source (TDS) on payments for the transfer of digital assets will remain in effect.
Online games
Tax Regulation: The upcoming Income Tax Bill aims to bring clarity to the tax regulations concerning the gaming sector and ensure that income derived from it is subject to appropriate taxation.
Currently, winnings from online gaming are taxed at a rate of 30% with TDS applied on amounts exceeding Rs 10,000 per transaction. However, the existing law lacks a clear definition of online gaming.
Definition: Under the proposed legislation, an 'online game' is defined as any game available on the internet and accessible through a computer or telecommunications device. The revised framework focuses on net winnings, calculated after accounting for entry fees or bets, with the goal of providing equitable tax treatment for both players and companies operating in the online gaming industry. The threshold of Rs 10,000 for TDS on net winnings from these games remains unchanged in this new bill.
TDS calculation: The new bill has proposed that online gaming companies/intermediaries must deduct and deposit TDS when a player's net winnings surpass Rs 10,000 in one transaction and during the crediting of winnings or payment. Additionally, the bill prohibits any deductions for expenses or allowances when calculating income from online gaming winnings.
Losses from gaming: The Income Tax Bill 2025 stated the offsetting of e-gaming losses against other income or carrying them forward to future years. This measure aims to ensure that all e-gaming winnings are subject to full taxation, providing a comprehensive approach to taxing this rapidly expanding sector.