The Indian government has announced new tax measures for cryptocurrency holders. The new rules will take effect from February 1, 2025, imposing severe penalties for previously undeclared crypto income.
New Tax Measures
Under the amendment to Section 158B of the Income Tax Act, introduced by Finance Minister Nirmala Sitharaman in the Union Budget 2025, crypto assets are now classified as Virtual Digital Assets (VDAs) and face the same tax treatment as cash, jewelry, and gold. This amendment requires crypto exchanges and financial institutions to report all transactions to tax authorities.
What This Means for Crypto Holders
Crypto holders need to be aware of the new rules, which include: - Heavy penalties: Unreported gains from the past four years will face a 70% penalty. - Mandatory reporting: Crypto transactions must be disclosed under Section 285BAA of the Income Tax Act. - Increased oversight: Authorities will conduct assessments to identify undeclared crypto income. - Retroactive enforcement: The new tax regime applies from February 1, 2025, covering gains from the last 48 months.
India's Crypto Crackdown
The Indian government's strict stance on crypto taxation supports a series of measures taken in 2024 against tax evasion. In December, India's Minister of State for Finance, Pankaj Chaudhary, disclosed that the tax authorities had uncovered ₹824 crore ($97 million) in unpaid Goods and Services Taxes (GST) from crypto exchanges. These actions highlight India's effort to tighten regulation on the crypto sector.
The Indian crypto market faces increasing regulatory pressure as the government enforces stricter tax policies. While changes to India's crypto stance are being reviewed, the immediate future promises rigorous financial scrutiny.
