CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 2.
3. In section 2 of the Income-tax Act,––
(a) in clause (42C), for the word “sales” occurring at the end and before Explanation 1, the word “transfer” shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2021;
(b) after clause (47), the following clause shall be inserted, namely:––
‘(47A) “virtual digital asset” means––
(a) any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically;
(b) a non-fungible token or any other token of similar nature, by whatever name called;
(c) any other digital asset, as the Central Government may, by notification in the Official Gazette specify:
Provided that the Central Government may, by notification in the Official Gazette, exclude any digital asset from the definition of virtual digital asset subject to such conditions as may be specified therein.
Explanation.––For the purposes of this clause,––
(a) “non-fungible token” means such digital asset as the Central Government may, by notification in the Official Gazette, specify;
(b) the expressions “currency”, “foreign currency” and “Indian currency” shall have the same meanings as respectively assigned to them in clauses (h), (m) and (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999)’
Notes on Clauses:
Clause 3 seeks to amend section 2 of the Income-tax Act relating to definitions.
Clause (42C) of the said section defines the expression “slump sale” as the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.
It is proposed to amend the said clause to substitute the word “sales”, with the word “transfer”.
This amendment will take effect retrospectively from 1st April, 2021 and, will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.
It is further proposed to insert a new clause (47A) to the said section to define the expression “virtual digital asset” to mean,––
(a) any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme and can be transferred, stored or traded electronically;
(b) a non-fungible token or any other token of similar nature by whatever name called;
(c) any other digital asset as may be notified by the Central Government in the Official Gazette in this behalf,
It is further proposed to provide that the Central Government may, by notification in the Official Gazette, exclude any digital asset from the definition of virtual digital asset subject to such conditions as may be specified therein.
It is also proposed to define certain expressions for the purposes of the said clause.
These amendments will take effect from 1st April, 2022.
