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Union Budget 2025: New Crypto Tax Proposals and What They Mean for Traders
In a significant development from India’s Union Budget 2025, cryptocurrency has been brought under Section 158B of the Income Tax Act, which addresses “undisclosed income.” This move introduces block assessments for crypto traders, empowering government agencies to investigate unreported crypto income, potentially imposing a hefty tax penalty of up to 60% for non-disclosure.
This retrospective measure, set to apply from February 1, 2025, will drastically increase the risk for retail crypto investors or traders who fail to report their earnings. Under block assessment, taxes are levied over multiple years, significantly escalating the financial consequences. Meyyapan Nagappan, Partner at Trilegal, pointed out that this shift will likely encourage traders to transact through regulated exchanges that withhold taxes, ensuring compliance with tax laws.
Moreover, India’s inclusion in the Crypto Asset Reporting Framework (CARF), as per the G20 declaration, mandates automatic exchange of tax information on crypto-assets across 52 jurisdictions. Alongside, the definition of “crypto asset” has been updated, recognizing it as a digital value secured by cryptographic technology, applicable from April 1, 2026.
Despite these advancements, there is no relief on high taxes in the sector. The current tax regime includes a 30% tax on crypto income and a 1% TDS on crypto transactions exceeding ₹10,000. These taxes have led to a sharp decline in trading volumes on Indian exchanges, with losses of up to 90% since their introduction in 2022.
While traders were hoping for tax reductions to foster participation, concerns remain over the continued disparity between compliant domestic exchanges and non-compliant international ones, particularly regarding the TDS provisions. The crypto community continues to await further adjustments to encourage growth while balancing regulatory oversight.
#CryptoTax #UnionBudget2025 #VDA #IndiaCrypto
In a significant development from India’s Union Budget 2025, cryptocurrency has been brought under Section 158B of the Income Tax Act, which addresses “undisclosed income.” This move introduces block assessments for crypto traders, empowering government agencies to investigate unreported crypto income, potentially imposing a hefty tax penalty of up to 60% for non-disclosure.
This retrospective measure, set to apply from February 1, 2025, will drastically increase the risk for retail crypto investors or traders who fail to report their earnings. Under block assessment, taxes are levied over multiple years, significantly escalating the financial consequences. Meyyapan Nagappan, Partner at Trilegal, pointed out that this shift will likely encourage traders to transact through regulated exchanges that withhold taxes, ensuring compliance with tax laws.
Moreover, India’s inclusion in the Crypto Asset Reporting Framework (CARF), as per the G20 declaration, mandates automatic exchange of tax information on crypto-assets across 52 jurisdictions. Alongside, the definition of “crypto asset” has been updated, recognizing it as a digital value secured by cryptographic technology, applicable from April 1, 2026.
Despite these advancements, there is no relief on high taxes in the sector. The current tax regime includes a 30% tax on crypto income and a 1% TDS on crypto transactions exceeding ₹10,000. These taxes have led to a sharp decline in trading volumes on Indian exchanges, with losses of up to 90% since their introduction in 2022.
While traders were hoping for tax reductions to foster participation, concerns remain over the continued disparity between compliant domestic exchanges and non-compliant international ones, particularly regarding the TDS provisions. The crypto community continues to await further adjustments to encourage growth while balancing regulatory oversight.
#CryptoTax #UnionBudget2025 #VDA #IndiaCrypto
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