Gift cards, vouchers, mileage points, reward points, and loyalty cards will be excluded from the definition of virtual digital assets (VDAs), Central Board of Direct Taxes (CBDT) said in a notification issued late Thursday.
This will ensure that these products do not face the tax applicable on VDAs such as cryptocurrencies and non-fungible tokens (NFTs), introduced this budget.
CBDT said the exemption will include gift card or vouchers that may be used to obtain goods or services on a discount on goods, mileage points, reward points or loyalty card under an award, and reward, benefit, loyalty, incentive, rebate or promotional programme that may be used or redeemed to obtain goods or services or a discount on goods or services.
It will also include subscription to website or platform or application, the notification, which comes into effect Thursday, said.
The Centre had rolled out a new tax regime applicable for cryptocurrencies from April 1 this year. Income from transactions in crypto assets now attracts a 30% tax and 1% tax is deducted at source (TDS) on transactions in such asset classes above a certain threshold.
Industry had expressed concerns about the wide definition of VDAs.
The clarification came a day before the implementation of the provision of 1% TDS on all VDA transaction.
CBDT has also notified Form 26QF which is required to be filed by all virtual digital asset exchanges under Sec 194S.