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The Income Tax Act 1961 was repealed under Section 536 of the new Act from April 1, 2026.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.

Is the Direct Tax Code 2025 applicable for crypto tax calculations now?

No. The Direct Tax Code 2025 is a proposal and is not yet law. All cryptocurrency and VDA taxation must be calculated according to Section 115BBH of the Income Tax Act, 1961.

What is the tax rate on income from NFTs and cryptocurrency in India?

Income from the transfer of any Virtual Digital Asset (VDA), including NFTs and cryptocurrencies, is taxed at a flat rate of 30% plus applicable surcharge and a 4% cess, under Section 115BBH.

Can I claim my internet and computer expenses against my crypto income?

No. Under Section 115BBH, the only deduction allowed when calculating income from VDAs is the 'cost of acquisition'. No other expenses, such as platform fees, internet bills, or hardware costs, are deductible against VDA income.

Crypto Tax for Creators: A Guide to Section 115BBH & DTC 2025

Key Takeaways

No "Direct Tax Code 2025" Yet: The Income Tax Act, 1961 remains the governing law. The Direct Tax Code (DTC) 2025 is a proposed reform, not an enacted law. All current compliance must adhere to the 1961 Act.
Existing Crypto Tax Law is Strict: Section 115BBH of the Income Tax Act, 1961, mandates a flat 30% tax (plus cess and surcharge) on income from Virtual Digital Assets (VDAs), including crypto and NFTs. No deductions are allowed except for the cost of acquisition.
Losses from VDAs Cannot Be Set Off: Under the current law, any loss incurred from the transfer of VDAs cannot be set off against any other income, nor can it be carried forward to future years.
TDS and GST Framework: A 1% Tax Deducted at Source (TDS) under Section 194S applies to VDA transfers above specified thresholds, ensuring transaction traceability. Additionally, services provided by crypto exchanges attract an 18% GST.

PART 1: EXECUTIVE SUMMARY

This guide provides a detailed analysis for YouTubers, freelancers, and digital creators on the taxation of Virtual Digital Assets (VDAs) such as cryptocurrencies and NFTs. It addresses the existing framework under the Income Tax Act, 1961, and clarifies the status of the proposed Direct Tax Code (DTC) 2025. It is imperative to understand that the DTC 2025 remains a proposal aimed at simplifying India's direct tax laws and has not replaced the 1961 Act. Therefore, all tax compliance for income generated from VDAs must currently follow the regulations established by the Finance Act, 2022.

The Old Law (1961) - Still in Effect: The Income Tax Act, 1961, as amended by the Finance Act, 2022, introduced a specific and stringent tax regime for VDAs. Section 115BBH governs the taxation of income from such assets. This section imposes a flat 30% tax on gains, allows no deductions for expenses other than the asset's acquisition cost, and disallows the offsetting or carry-forward of losses. To ensure compliance, Section 194S was also introduced, mandating a 1% TDS on VDA transfers.
The "New Law" (DTC 2025) - A Future Proposal: The Direct Tax Code is a long-discussed reform intended to replace the current, complex tax act with a simpler, more modern framework. While various drafts and proposals have been made over the years, there is no enacted version of a "Direct Tax Code 2025." Critically, past proposals have not detailed specific tax treatments for VDAs. Should the DTC be implemented, it would likely absorb or modify the principles of Section 115BBH, but its final form is speculative. For now, it has no legal standing for compliance purposes.
Who is Impacted: This tax regime significantly affects the entire creator economy. This includes:
- YouTubers & Streamers receiving income in cryptocurrency (e.g., tips, donations).
- NFT Artists & Collectors generating income from minting and selling digital art.
- Freelancers & Digital Marketers being paid for services in VDAs.
- Web3 Developers and Entrepreneurs dealing with tokens as part of their business model.

PART 2: DETAILED TAX ANALYSIS

1. Context for Creators & Freelancers

For digital creators and freelancers, the move into Web3 and the use of Virtual Digital Assets is a natural evolution. Payments in cryptocurrency, creation of NFTs, and participation in decentralized platforms are increasingly common. However, this evolution brings significant tax compliance responsibilities under Indian law.

The government introduced a specific tax framework for VDAs in 2022 to track and tax these transactions transparently. For creators, every transaction—whether receiving crypto for a sponsored video, selling an NFT, or even swapping one cryptocurrency for another—is a taxable event. Unlike traditional income, VDA income is ring-fenced, meaning its profits are taxed at a high flat rate and its losses cannot be used to reduce taxes on other income sources like freelancing fees or YouTube ad revenue. This makes meticulous record-keeping and a clear understanding of the law non-negotiable.

2. Tax Matrix: 1961 Provisions vs 2025 Act

Since the Direct Tax Code 2025 is not law, this matrix compares the current, effective provisions of the Income Tax Act, 1961, with the hypothetical, proposed changes of a future DTC.

Feature	Income Tax Act, 1961 (Current Law)	Proposed Direct Tax Code (DTC) 2025 (Hypothetical)
Governing Section	Section 115BBH for income tax; Section 194S for TDS.	Not specified. A new code would either introduce new sections or consolidate existing principles.
Tax Rate on VDA Income	Flat 30% (plus applicable surcharge and 4% cess). This rate applies irrespective of the taxpayer's income slab or holding period.	Unknown. A future code could rationalize this rate or align it with capital gains tax slabs, but this is purely speculative. Past DTC drafts aimed to simplify tax slabs generally.
Allowable Deductions	Only the "cost of acquisition" is deductible. No other expenses (e.g., internet costs, platform fees, wallet charges, electricity for mining) can be claimed.	Unknown. A key objective of the DTC is to reduce exemptions and deductions to simplify the law. It is unlikely that a new code would introduce more liberal deductions for VDA income.
Set-off of Losses	Strictly prohibited. Losses from VDA transactions cannot be set off against gains from other VDAs or any other income head (e.g., salary, business income).	Unknown. This is a highly restrictive provision. A future code might reconsider this to align VDA treatment with other assets, but there is no official proposal to this effect.
Carry Forward of Losses	Not allowed. VDA losses cannot be carried forward to subsequent financial years.	Unknown. This would depend on the policy regarding the set-off of losses.
TDS Requirement	1% TDS under Section 194S on the transfer of VDAs if the aggregate value exceeds ₹50,000 for specified persons (individuals/HUF) or ₹10,000 for others in a financial year.	A new code would likely retain TDS mechanisms to ensure transaction reporting and tax traceability, as this is a core tenet of modern tax administration.
Gifting of VDAs	Taxable in the hands of the recipient if the aggregate value exceeds ₹50,000. The income is taxed at the flat 30% rate under Section 115BBH.	This would likely be governed by the general provisions for gifts, but the specific tax rate applied could change depending on how VDA income is classified.

3. GST, TDS, and Platform Interplay

TDS under Section 194S: This is a critical compliance point for creators. When you sell a VDA (like an NFT or crypto), the buyer is responsible for deducting 1% of the sale value as TDS.

Transactions via Exchanges: If you trade on a major Indian exchange, the platform typically handles the TDS deduction and reporting.
Peer-to-Peer (P2P) or Direct Sales: If you sell an NFT directly to a buyer, the responsibility for TDS falls on the buyer. As a seller, you must ensure you receive Form 16A from the buyer to claim credit for the TDS deducted.
Payment in Kind: If you exchange one VDA for another (e.g., swapping ETH for a stablecoin), this is still a "transfer." Both parties must ensure that tax has been paid before releasing the consideration.

GST (Goods and Services Tax): The GST framework adds another layer of complexity.

Crypto as "Goods": For GST purposes, cryptocurrencies are generally treated as "goods."
Services by Exchanges: The services provided by crypto exchanges, such as trading fees, wallet services, and commissions, are subject to 18% GST. This applies to both Indian and offshore exchanges providing services to Indian users.
NFTs - Goods or Services? The classification of NFTs is less clear. If an NFT is considered a work of art or digital good, its sale could attract GST. If the underlying transaction is seen as a service (e.g., licensing of intellectual property), the GST implications would differ. Current consensus leans towards classifying them based on the underlying asset they represent, which often attracts 18% GST.
Mining: The activity of crypto mining, which generates new coins, may be treated as a supply of service, making the reward or transaction fees subject to GST if the turnover exceeds the threshold limit of ₹20 lakh.

4. Practical Tax Calculation Example

Scenario: A freelance graphic designer and YouTuber based in India, earns income from various sources in a financial year.

Freelance Income: ₹12,00,000
YouTube Ad Revenue: ₹8,00,000
VDA Transactions:
1. Sold an NFT for ₹3,00,000 (Cost of minting/acquisition: ₹50,000).
2. Bought Bitcoin for ₹1,00,000 and sold it for ₹1,50,000.
3. Bought Ethereum for ₹2,00,000 and sold it for ₹1,20,000 (incurring a loss).

Tax Calculation (under the Income Tax Act, 1961):

Step 1: Calculate Tax on VDA Income

NFT Gain: ₹3,00,000 (Sale Price) - ₹50,000 (Cost) = ₹2,50,000
Bitcoin Gain: ₹1,50,000 (Sale Price) - ₹1,00,000 (Cost) = ₹50,000
Ethereum Loss: ₹1,20,000 (Sale Price) - ₹2,00,000 (Cost) = (₹80,000)
Total Taxable VDA Income: The ₹80,000 loss from Ethereum cannot be set off against the gains from the NFT and Bitcoin.
- Taxable Gain = ₹2,50,000 (NFT) + ₹50,000 (Bitcoin) = ₹3,00,000
Tax on VDA Income (under Sec 115BBH): 30% of ₹3,00,000 = ₹90,000
Add 4% Cess: ₹90,000 * 4% = ₹3,600
Total VDA Tax: ₹93,600

Step 2: Calculate TDS on VDA Sales

TDS on NFT Sale: 1% of ₹3,00,000 = ₹3,000
TDS on Bitcoin Sale: 1% of ₹1,50,000 = ₹1,500
Total TDS Credit Available: ₹4,500

Step 3: Calculate Tax on Other Income

Total Professional Income: ₹12,00,000 (Freelance) + ₹8,00,000 (YouTube) = ₹20,00,000
Assuming the creator claims standard business deductions of ₹5,00,000.
Net Taxable Professional Income: ₹15,00,000
Tax on this income will be calculated as per the applicable slab rates (old or new regime). This tax is separate from the flat 30% VDA tax.

5. Compliance Checklist for Creators

Maintain Detailed Records: Keep a meticulous ledger of every VDA transaction, including date, type of VDA, quantity, sale price, cost of acquisition, and platform used.
Segregate VDA and Rupee Wallets: Where possible, use separate wallets or accounts for professional VDA earnings versus personal investments to simplify accounting.
Track Cost of Acquisition: For every VDA you acquire (whether through purchase, mining, or as payment), accurately record its value in INR at the time of acquisition. This is your only deductible cost.
Verify TDS Compliance: For every sale, ensure the 1% TDS is deducted and deposited. Collect Form 16A or check your Form 26AS to claim credit for the tax already paid.
File ITR with VDA Schedule: Disclose all your VDA gains in the dedicated 'Schedule VDA' in your Income Tax Return (ITR) form.
Factor in GST: If your total turnover from services (including mining rewards or certain NFT sales) exceeds ₹20 lakh, register for GST and file regular returns.
Consult a Professional: Given the complexity and the high tax rate, consulting a Chartered Accountant specializing in digital asset taxation is highly advisable to ensure accurate compliance and avoid penalties.

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