In India, cryptocurrency traders may face significant tax penalties due to previously undisclosed profits under new amendments to the tax legislation of this South Asian country.
According to Indian Finance Minister Nirmala Sitharaman’s Union Budget 2025 announcement, cryptocurrencies will be included under Sector 158B of the Income Tax Act.
The new amendment to the tax legislation of the Asian country provides for the possibility to block gains from the digital currency if it is not reported. In this case, the cryptocurrency is in the area of tax treatment, which also applies to traditional assets, including money, jewelry, and bullion.
According to the new amendment, the cryptocurrency will fall under the definition of Virtual Digital Assets (VDAs). In this case, the crypto asset has been defined in section 2(47A) of the Act under the existing definition of VDA. A reporting entity, as may be prescribed under section 285BAA of the Act, will be required to furnish information on crypto assets.
The new crypto tax proposition will be retrospectively applicable from February 1.
In December 2024, India’s Minister of State for Finance, Pankaj Chaudhary, stated that the government of the South Asian country had found 824 crore Indian rupees ($97 million) in unpaid taxes on goods and services by several crypto exchanges.
It is also worth mentioning separately that in August last year, Indian law enforcement agencies demanded unpaid taxes from Binance for 722 crore Indian rupees.
Indian authorities may issue a tax penalty of up to 70% on previously undisclosed crypto profits. This measure can be applied to crypto gains that remained undisclosed for 48 months after the relevant tax assessment of the year. In the text of the official document, it was noted that 70% of the aggregate of tax and interest payable on additional income was disclosed in the updated income tax return [ITR].
The amendments come after Bybit exchange suspended its services in India on January 10. The firm said that the reason for its decision was pressure from regulators in the South Asian country. At the same time, Bybit continues to seek a full operating license from India’s Financial Intelligence Unit.
As we have reported earlier, Digital Payments Surge in Non-Metro Cities of India.
