The Indian government has announced significant tax measures on undeclared cryptocurrency gains, starting February 2025. This initiative is part of amendments to the Income Tax Act introduced in the Union Budget 2025.
New Tax Measures for Crypto Holders
India is tightening its grip on cryptocurrency earnings by implementing retrospective taxation. Starting February 1, 2025, unreported gains from the past four years will be subject to a 70% penalty, plus additional interest and fines. All crypto transactions must be disclosed under Section 285BAA of the Income Tax Act, and authorities will conduct block assessments to identify undeclared income.
Background of India's Tax Crackdown
The Indian government’s tough stance on crypto taxation follows a series of enforcement actions in 2024. In December of that year, ₹824 crore ($97 million) in unpaid taxes were uncovered across multiple crypto exchanges.
Other Countries' Stance on Crypto Regulation
India is not alone in tightening crypto regulations. In June 2024, the U.S. Internal Revenue Service introduced new reporting rules for digital assets, requiring third-party platforms to report transactions for tax compliance. However, while the U.S. changes have faced strong opposition, India has taken a stricter approach by imposing direct penalties on undeclared gains.
The Indian crypto market faces increasing regulatory pressure as the government enforces stricter tax policies. While India’s economic affairs secretary has hinted at possible revisions to the country’s stance on crypto in the future, the immediate outlook suggests tighter financial scrutiny.
