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Update: Clarification on exclusions from the definition of Virtual Digital Assets
Update: Clarification on exclusions from the definition of Virtual Digital Assets

July 6, 2022

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Union Budget 2022 – 23 introduced tax @ 30% on income arising from transfer of Virtual Digital Assets (VDA) under S.115BBH of the Income-tax Act, 1961 (IT Act). For this, Finance Act, 2022 provided the definition of VDA under S.2(47A).

NASSCOM made a representation to Ministry of Finance highlighting that the definition of the term “Virtual Digital Assets” is very wide and could result widespread litigation. We had requested MoF to clearly clarify the exclusions from the definition of VDA.

In this regard, Central Board of Direct Taxes (CBDT) issued Notification 74/2022 clarifying that the following shall be excluded from the definition of virtual digital asset:

  1. Gift card or vouchers, being a record that may be used to obtain goods or services or a discount on goods or services;
  2. 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;
  3. Subscription to websites or platforms or application

This is a positive clarification and is in line with NASSCOM’s recommendation to Ministry of Finance.

We hope you will find the update useful.


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