In the latest Budget 2025 announcement, the Indian government has introduced significant updates to the taxation framework for cryptocurrencies and other virtual digital assets (VDAs). This move aims to bring more clarity and compliance to the rapidly evolving crypto market, though it has left many investors seeking further relief from stringent tax norms.
The Finance Minister, Nirmala Sitharaman, proposed amendments to the Income Tax Act, mandating prescribed entities to report transaction details of crypto assets to tax authorities. This step is intended to curb tax evasion and ensure transparency in the crypto trading ecosystem.
A notable change is the classification of VDAs as undisclosed income if not reported. If unreported crypto gains are detected, investors could face a hefty 60% tax rate along with a 50% penalty on the tax amount, making non-compliance a costly affair.
Despite calls from the crypto community for tax relief, Budget 2025 has not reduced the existing 30% tax on crypto gains or the 1% TDS on transactions. This has disappointed many investors who were hoping for a more favorable tax regime to encourage growth in the sector.
Industry experts believe that while the new compliance measures will improve oversight, they may also deter small-scale investors due to the increased reporting burden. The lack of clarity on certain aspects, such as taxation of crypto-to-crypto trades, continues to be a concern for the community.
As the crypto market in India matures, stakeholders are urging the government to provide detailed guidelines and consider progressive tax policies in future budgets. For now, investors must adapt to the stricter reporting norms and brace for potential penalties on non-compliance.
Andrew Lee
