The Indian government has announced significant changes in the taxation of cryptocurrency earnings. Starting February 1, 2025, undeclared cryptocurrency profits will face penalties of up to 70%, marking a tightening of tax oversight in this sector.
What This Means for Crypto Holders
The Indian government is tightening the grip on cryptocurrency earnings by implementing retrospective taxation. Under the new rules, 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. Authorities will conduct block assessments to identify undeclared crypto income.
India’s Crypto Crackdown
The Indian government’s tough stance on crypto taxation follows a series of enforcement actions in 2024. In December 2024, India’s Ministry of Finance revealed ₹824 crore ($97 million) in unpaid Goods and Services Taxes (GST) from multiple crypto exchanges. These actions indicate a broader effort to regulate and monitor crypto-related financial activities.
Global Changes in Crypto Regulation
Amid India’s stringent tax measures, changes are also observed on a global scale. In June 2024, the U.S. IRS introduced new reporting rules for digital assets, requiring third-party platforms to report transactions for tax compliance. Despite opposition from crypto advocates in the U.S., India has taken an even stricter approach by imposing direct penalties on unreported gains.
The Indian crypto market faces increasing regulatory pressure with the implementation of strict tax initiatives. While India’s economic affairs secretary hinted at possible revisions to the country’s stance on crypto, the immediate outlook remains one of tightening financial scrutiny.
