The government is likely to tweak the definition of virtual digital assets to make the tax policy clearer. The new definition will get clarity that virtual digital assets means cryptocurrencies, cryptographic tokens and cryptographic vouchers. Government is very clear that certain categories, which were getting included of demat shares, credit card points, e-vouchers, cashback points, royalty points, frequent flyer points, will not qualify as digital virtual assets.

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Also Reserve Bank of India’s (RBI) proposed Central Bank Digital Currency (CBDC) will not be covered under the new tax policy on virtual digital assets.

It is understood that the IT department will not just tweak the definition, they will also issue a detailed FAQs including the changes to the definition to be included in the finance bill.

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Watch the accompanying video of CNBC-TV18’s Timsy Jaipuria for more details.

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