Indian Crypto Tax Amendments in Union Budget 2025 Explained
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- Indian FM Nirmala Sitharaman defines VDAs as undisclosed income in Union Budget 2025.
- Section 158B of the Income Tax Act will include Virtual Digital Assets (VDAs) from today.
India is one of those countries with stringent laws around cryptocurrencies and their adoption. The government first recognized and imposed taxes on digital assets starting from April 2022. Even after losing considerable trading volume following the tax rules, the Indian government hasn’t lowered hefty taxes on crypto income.
During the Union Budget 2025 announcement, Finance Minister Nirmala Sitharaman didn’t declare any significant changes to the crypto tax. She announced several tax amendments keeping the capital gains tax of 30%, no loss set-offs, and 1% TDS on crypto transactions the same.
However, with the insertion of Section 285BAA in the Income-tax Act, 1961, entities dealing with cryptocurrencies must report transaction details within a specified period. This is to increase transparency and monitoring of crypto transactions in the country.
Another notable announcement is the expansion of VDA definition in the Income Tax Act. The VDAs will be included alongside money, bullion, and jewellery for assessment purposes from Feb 01, 2025, as part of the Section 158B.
Major tax relief for income of up to 12 lakhs INR in the Union Budget 2025 has been the highlight. The previous zero-tax policy only applied for an income of up to 7 lakhs INR. While there is no ease of tax policies for crypto investors, the increased slab for zero-tax policy is the major highlight of Budget 2025.
Indian Crypto Investors Remain Despair With the Union Budget 2025
India has a thriving crypto investor community and plays a significant role in the broader crypto adoption and investment. However, several reports indicated loss of crypto trading volume in billions after the crypto tax rules in 2022. A report by Esya Centre highlighted that the country lost over 7,000 crore in tax because of offshore trading.
With the shift in global crypto markets such as the US, Indian investors expected a revision of crypto taxation in 2025. As there are no changes, investors remain in despair. Furthermore, defining VDAs as undisclosed income might impact the Indian crypto industry moving forward.
Referring to the same, KoinX Founder Punit Agarwal says,
“The new tax amendments signal a clear shift in how crypto is regulated in India. Classifying crypto as ‘undisclosed income’ with retrospective effect raises concerns about scrutiny on past transactions. Expanding the definition of VDAs means more digital assets will now be taxed, increasing compliance requirements for businesses and investors. The continued 1% TDS remains a challenge for traders, impacting liquidity.”
India has always maintained its tough stance when it comes to cryptocurrencies. The current crypto tax amendments indicate that the country prioritises transparency, along with strict monitoring of crypto transactions.
As the regulatory framework evolves, the industry must adapt to ensure transparency and compliance in the long run. It also increases the need for greater awareness and responsible tax practices.
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