The Indian government has announced new measures for taxing undeclared cryptocurrency gains. These changes to the Income Tax Act will take effect from February 1, 2025.
What This Means for Crypto Holders
The new retrospective tax regime requires crypto holders to report gains from the past 48 months and pay penalties of 70%, plus additional interest and fines. All crypto transactions must be disclosed under Section 285BAA. Tax reform authors highlighted that exchanges and financial institutions must keep detailed records of all transactions.
Anti-Tax Evasion Measures
India's tough stance on crypto taxation follows actions in 2024. In December, authorities uncovered ₹824 crore ($97 million) in unpaid GST from several crypto exchanges. Earlier, Binance received a tax demand of ₹722 crore ($85 million) in August 2024. These actions indicate significant efforts to monitor crypto transactions.
Regulations in Other Nations
India is not alone in tightening crypto regulations. In June 2024, the US IRS introduced new reporting rules for digital assets, mandating third-party platforms to report transactions for tax compliance. However, the US faced opposition, with crypto advocacy groups suing the IRS. India, meanwhile, adopted a stricter approach by imposing direct penalties on unreported gains.
The Indian crypto market faces increasing regulatory pressure as the government imposes stricter tax policies. While there may be revisions in India's crypto stance, the immediate future indicates tighter financial scrutiny.
