What is the Direct Tax Code 2025 and when did it come into effect?

The Direct Tax Code 2025 (Income Tax Act 2025) replaced the Income Tax Act 1961 from April 1, 2026. It simplifies the entire direct tax framework, renumbers sections, removes redundancies, and modernizes taxation for India.

Is the Income Tax Act 1961 still valid after April 2026?

The Income Tax Act 1961 was repealed under Section 536 of the new Act from April 1, 2026. However, all assessments, appeals, and proceedings for periods before April 1, 2026 continue under the old ITA 1961 rules.

What is the new section number for Section 80C in Income Tax Act 2025?

Section 80C of the ITA 1961 maps to Section 123 of the Direct Tax Code 2025. Deductions for LIC premiums, PPF, ELSS, EPF, and home loan principal repayment continue under the new act.

What is the new section for TDS on professional fees (194J)?

Section 194J (TDS on professional and technical services) of the old Income Tax Act 1961 has been renumbered in the Direct Tax Code 2025. Use our free converter at ita1961to2025.in to find the exact new section number instantly.

How do I convert old income tax section numbers to new 2025 numbers?

Visit ita1961to2025.in and use the free section search tool. Type any old ITA 1961 section number (e.g., 80C, 194J, 139) and instantly see the new DTC 2025 equivalent, its status, and key changes.

Is the ITA 1961 to 2025 mapping tool free for CAs and tax professionals?

Yes, completely free. The section mapper, comparison cheat sheet, PDF download, and Tax Academy blog are all free for Chartered Accountants, tax lawyers, law students, and taxpayers.

Which sections were completely deleted in the new Income Tax Act 2025?

Several redundant and overlapping sections from ITA 1961 were not carried into DTC 2025. Use our free converter — each section is marked as Retained, Modified, or Deleted so you can quickly check any section's status.

Can I download the ITA 1961 to DTC 2025 comparison as a PDF?

Yes! Visit the Comparison page at ita1961to2025.in/comparison to download a free cheat sheet PDF showing side-by-side mapping of key ITA 1961 sections to their DTC 2025 equivalents.

What is the final tax rate on crypto and NFT gains in India?

The final tax rate is a flat 30% on the gains, plus applicable surcharge and a 4% health and education cess. This is mandated by Section 115BBH of the Income Tax Act, 1961.

Can I claim my expenses like minting fees or internet costs against NFT profits?

No. Under Section 115BBH, the only deduction allowed is the 'cost of acquisition' of the Virtual Digital Asset. All other expenses related to the transfer, like platform fees, internet costs, or minting fees (gas fees), are not deductible.

If I make a loss on Bitcoin but a profit on an NFT sale, can I adjust the loss?

No. The law explicitly prohibits the setting off of losses from the transfer of any VDA against gains from another VDA. The loss cannot be set off against any other income source either and cannot be carried forward to future years.

VDA Tax Guide: 30% Tax on Crypto & NFTs Explained (2025 Update)

Key Takeaways

Current Flat Tax: Under the Income Tax Act, 1961, all income from the transfer of Virtual Digital Assets (VDAs) is taxed at a flat rate of 30% plus applicable surcharge and cess, irrespective of your income slab or how long you held the asset.
No Deductions or Loss Set-Off: The current law is stringent. You cannot claim any expenses (like internet fees, platform charges, or electricity costs) against VDA income, except for the original cost of acquiring the asset. Furthermore, losses from VDA transactions cannot be set off against any other income, including gains from other VDAs.
Mandatory TDS: All VDA transfers are subject to a 1% Tax Deducted at Source (TDS) on the transaction value if annual thresholds are met, which helps the government track these transactions.
GST Implications: Beyond income tax, GST may be applicable at 18% on the services provided by crypto exchanges and on the sale of NFTs, adding another layer of compliance for creators and freelancers.

PART 1: EXECUTIVE SUMMARY

This guide provides a detailed analysis for YouTubers, freelancers, and digital creators on the taxation of Virtual Digital Assets (VDAs), comparing the established provisions of the Income Tax Act, 1961, with the proposed, forward-looking framework of the Direct Tax Code (DTC) 2025.

The Old Law (Income Tax Act, 1961): To address the ambiguity around crypto and other digital assets, the government introduced Section 115BBH through the Finance Act, 2022. This section established a specific and rigorous tax regime. All income from the transfer of VDAs—which includes cryptocurrencies, NFTs, and other tokens—is subject to a flat 30% tax, plus cess. Critically, this framework prohibits the deduction of any expenses other than the acquisition cost and does not allow for the setting off of losses against other income. This has created a high-tax environment with significant compliance burdens, including a 1% TDS under Section 194S.
The New Law (Proposed Direct Tax Code 2025): The Direct Tax Code (DTC) is a long-standing proposal aimed at simplifying and modernizing India's direct tax laws, intended to replace the complex 1961 Act. While the final version of the DTC is not yet law, its core objective is to enhance transparency, reduce litigation, and simplify compliance. For VDAs, while early proposals suggest the tax rate might remain high, the broader simplification could potentially harmonize definitions and integrate digital asset taxation more seamlessly with other heads of income in the future, although current discussions indicate VDA taxation rules will remain largely consistent.
Who is Impacted: This tax regime directly impacts the entire creator economy. This includes:
- NFT Artists selling their digital artwork.
- YouTubers and Streamers receiving tips or payments in cryptocurrency.
- Freelancers accepting international payments in VDAs.
- Crypto Traders and Investors within the creator community who manage digital assets as part of their portfolio.

PART 2: DETAILED TAX ANALYSIS

1. Context for Creators & Freelancers

The creator economy operates at the forefront of digital innovation, where VDAs are not just speculative investments but functional tools for monetization and engagement. NFTs provide a new paradigm for digital ownership and royalties, while cryptocurrencies offer a borderless and rapid method for receiving payments from global clients and audiences. However, this financial innovation comes with significant tax complexities under the current Indian legal framework. The introduction of Section 115BBH was a move to bring these transactions into the tax net definitively, but its flat 30% "30 tax plan" and restrictive rules on deductions and loss set-offs present a substantial financial challenge for creators. Any income, whether from selling an NFT minted for a few hundred rupees or receiving a small crypto tip, is treated harshly, akin to winnings from lotteries or gambling. This makes meticulous record-keeping and tax planning essential for survival and growth in this niche.

2. Tax Matrix: 1961 Provisions vs 2025 Act

Feature	Income Tax Act, 1961 (Current Law)	Proposed Direct Tax Code, 2025 (Hypothetical Framework)
Governing Section	Section 115BBH for tax rate; Section 194S for TDS.	Aims to consolidate and simplify scattered provisions into a more logical structure.
Tax Rate	Flat 30% on gross profit from transfer of any VDA, plus applicable surcharge and 4% cess.	While the DTC's primary goal is simplification, current proposals indicate the 30% flat rate for VDAs may be retained to discourage speculative activity. No changes are expected initially.
Allowable Deductions	Only the 'Cost of Acquisition' is deductible. No other expenses (e.g., gas fees for minting, platform commissions, internet, hardware costs) are allowed.	The DTC aims to reduce exemptions across the board to simplify the law. It is unlikely that special deductions for VDA-related expenses would be introduced unless VDAs are reclassified.
Set-Off of Losses	Strictly prohibited. Losses from one VDA transfer cannot be set off against gains from another VDA, nor against any other income head (like salary or business income).	The principle of not allowing speculative losses to be set off against other income heads is a standard tax policy. This restrictive treatment is expected to continue under the DTC framework to ring-fence VDA activities.
Asset Classification	VDAs are treated as a distinct asset class. The income is taxed under its own regime regardless of whether it would otherwise be classified as Business Income or Capital Gains.	The DTC seeks clearer, more streamlined definitions. VDAs would be formally defined and classified as a specific type of property or capital asset, removing any remaining ambiguity.
Gifting of VDAs	Gifts of VDAs received are taxable in the hands of the recipient under 'Income from Other Sources' if the aggregate value exceeds ₹50,000 in a financial year.	This principle is likely to remain unchanged, as the taxation of gifts is a well-established part of direct tax law. The DTC would likely integrate this rule into its broader framework for gifts.
Compliance	Requires filing of a dedicated 'Schedule VDA' in the Income Tax Return (ITR) to report all transactions.	A key goal of the DTC is to make compliance more digital and user-friendly, potentially through pre-filled returns and simplified forms.

3. GST, TDS, and Platform Interplay

The tax compliance for a digital creator doesn't end with income tax. The interplay of GST and TDS creates a multi-layered compliance environment.

Tax Deducted at Source (TDS) under Section 194S: The law mandates a 1% TDS on the gross consideration of every VDA transfer, subject to an annual threshold of ₹50,000 for specified individuals and ₹10,000 for others.
- Platform Responsibility: If you sell an NFT or crypto on an Indian exchange, the platform is responsible for deducting this TDS and depositing it with the government.
- Buyer's Responsibility: In peer-to-peer (P2P) transactions where no exchange is involved, the buyer is responsible for deducting the 1% TDS before making the payment.
- In-Kind Transactions: For crypto-for-crypto swaps, both parties are considered buyers and sellers, and both must ensure that TDS has been paid before the exchange. This TDS amount can be claimed as a credit against your final tax liability when you file your ITR.
Goods and Services Tax (GST): The GST framework for VDAs is still evolving, but the current interpretation is as follows:
- NFTs as a Service: The sale of an NFT is generally considered a supply of service. If a creator's annual turnover exceeds the GST registration threshold (₹20 lakhs), they must register for GST and charge 18% GST on the sale value.
- Platform Fees: Crypto exchanges and NFT marketplaces charge GST at 18% on their transaction fees, commissions, and other service charges.
- Crypto as Goods: While there is ongoing debate, cryptocurrencies may be treated as 'goods' for GST purposes. If so, GST would be applicable on their sale, though this area remains complex and lacks full clarity.

4. Practical Tax Calculation Example

Let's consider a freelance digital artist, Anjali, who operates in India.

Transaction Data for Financial Year 2024-25:

NFT Sale: Anjali creates and sells an NFT for 1 ETH. The value of 1 ETH on the date of sale is ₹2,50,000. Her cost of acquisition (gas fees for minting) was ₹5,000.
Freelance Payment: She receives payment for a logo design from a US client amounting to 0.1 BTC, valued at ₹4,00,000 on the date of receipt.
Crypto Trading Loss: She sold some other cryptocurrency during the year at a loss of ₹30,000.

Tax Calculation under the Income Tax Act, 1961:

Taxable Income from NFT Sale:
- Sale Consideration: ₹2,50,000
- Cost of Acquisition: ₹5,000
- Taxable Gain (VDA): ₹2,45,000
Income from Freelance Work:
- The payment of 0.1 BTC is treated as her professional income. The value of ₹4,00,000 will be added to her total business/professional income and taxed at her applicable slab rate. When she later sells this 0.1 BTC, any gain from its ₹4,00,000 value will be taxed at 30% under Section 115BBH.
Treatment of Crypto Trading Loss:
- The loss of ₹30,000 cannot be adjusted against the NFT gain of ₹2,45,000 or any other income. This loss is a dead loss for tax purposes.
Final Tax Liability on VDA Income:
- Taxable VDA Gain: ₹2,45,000
- Tax @ 30%: ₹2,45,000 * 30% = ₹73,500
- Health & Education Cess @ 4%: ₹73,500 * 4% = ₹2,940
- Total Tax on VDA Gain: ₹76,440
This is in addition to the tax she will pay on her other professional income of ₹4,00,000.
TDS Compliance:
- On the NFT sale of ₹2,50,000, the platform or buyer should have deducted 1% TDS, which is ₹2,500. Anjali can claim this ₹2,500 as a credit against her final tax liability of ₹76,440.

5. Compliance Checklist for Creators

Maintain a Detailed Ledger: Keep a meticulous record of every VDA transaction, including date, value in INR at the time of transaction, purpose (sale, purchase, swap), and acquisition cost.
Segregate Wallets: Use separate crypto wallets for personal investments and business transactions to simplify record-keeping.
Track Cost of Acquisition: For every VDA you acquire, record its purchase price in INR. For mined assets, the acquisition cost is considered zero.
Verify Form 26AS: Ensure that the TDS deducted by platforms/buyers on your VDA sales is reflected in your Form 26AS/Annual Information Statement (AIS).
File 'Schedule VDA': Accurately report all your VDA gains in the dedicated schedule in your ITR form during tax filing.
Assess GST Applicability: Monitor your annual turnover. If it approaches the ₹20 lakh threshold, consult with a tax professional regarding GST registration.
Pay Advance Tax: Since VDA income is high and subject to a flat 30% tax, it can significantly increase your total tax liability. Pay advance tax in quarterly installments to avoid interest penalties at the end of the year.

💡 Creator Tax Tip: Maximize your deductions on equipment, software, and home office under the new 2025 rules.