India tax treatment

India VDA tax now sits in the Income-tax Act, 2025. Transfer income, withholding, thresholds, and exchange reporting are overlapping obligations, not a single-path decision tree.

Tax obligation map

VDA tax consequences overlap. They are not an either-or tree once the asset is already inside the VDA definition.

Tax treatment overview

The Income-tax Act, 2025 came into force on 1 April 2026, as confirmed in the CBDT press release. For VDA treatment, the new Act keeps the special transfer-income rule in section 194 and the withholding rule in section 393.

The tax consequence remains ring-fenced for assets already inside the VDA definition. Section 194 applies the 30% transfer-income rule, limits deductions to cost of acquisition, and disallows loss set-off or carry-forward for VDA transfers. Section 393 applies withholding on consideration, with threshold relief still published by the Income Tax Department.

The transition FAQ and Form 142 note are now important operational sources because older references to section 194S and form 26QF continue to appear in some public materials while the new Act and Rules 2026 remap them into the 2025 Act.

Tax matrix

Tax item	Treatment	Consequence
VDA definition	Income-tax Act, 2025.	Classification first step.
Transfer income	Section 194.	30% rule applies with cost-only deduction.
Withholding on transfer	Section 393.	Deduct tax on consideration where the withholding conditions are met.
Threshold relief	Threshold page.	Small-transfer relief remains published by the Income Tax Department.
Exchange filing workflow	Form 142.	Supports VDA withholding reporting by exchanges.
Transition handling	Transition FAQ.	Use to map older section / form references into the 2025 Act.