Virtual Digital Asset (VDA) is the legal term for crypto in India. The definition was added to the Income Tax Act in 2022 specifically to enable Section 115BBH and 194S. The drafting is broad — and that breadth matters.
The legal definition
Section 2(47A) of the IT Act: 'Any information or code or number or token (not being Indian or foreign currency), generated through cryptographic means or otherwise, providing a digital representation of value...'
It explicitly includes NFTs and 'any other digital asset, as the Central Government may notify'.
What's clearly included
All major cryptocurrencies (BTC, ETH, USDT, USDC, BNB, SOL, etc.). NFTs. Tokenised securities issued via blockchain. Stablecoins of all kinds.
What's contested
In-game items in cryptocurrency games: likely VDA but assessed case-by-case.
Loyalty tokens: probably not VDA if they don't have value-transfer characteristics.
CBDC (Digital Rupee): explicitly excluded as it's RBI-issued.
Why this matters
If you trade something the IT Department classifies as VDA, you owe 30% under 115BBH. If it's not VDA, normal capital-gains rules apply (LTCG/STCG, with deductions and offsetting). Classification is high-stakes.
Key takeaways
- VDA = Virtual Digital Asset, defined in Section 2(47A).
- Broadly drafted — covers all major crypto, stablecoins, NFTs.
- CBDC explicitly excluded.
- Classification matters: VDA = 30% flat; non-VDA = regular capital gains.
