India’s New Tax Bill 2025 - What About Crypto?

The New Income Tax Bill 2025 in India includes virtual digital assets (VDAs), such as crypto, as part of "undisclosed income" during searches.

This means that if unreported crypto gains are discovered during a tax inquiry, authorities can impose a 60% tax along with a 50% penalty on the tax amount

The government has decided to maintain the 30% tax rate on crypto income and the 1% Tax Deducted at Source (TDS) on crypto transactions.

The definition of virtual digital assets (VDA) has been broadened to include crypto-assets that utilize cryptographic security and distributed ledger technology. The bill specifies that a VDA is any information, code, number, or token (including NFTs) generated through cryptographic means or otherwise, which is not Indian or foreign currency, and can be transferred, stored, or traded electronically.

Reporting entities like banks and crypto exchanges are now required to regularly report information on crypto asset transactions for both past and future periods. The Finance Bill 2025 mandates reporting entities dealing in crypto-assets to furnish information on transactions related to such assets.

The amendments are set to take effect on April 1, 2026. The Union Budget 2025 offers no tax relief for crypto investors, maintaining the 30% tax on gains and 1% TDS on transactions.

The creation of a separate section for Virtual Digital Assets (VDAs) in ITR forms for the fiscal year 2023-24 indicates the government's efforts to monitor crypto transactions.

It is crucial for all crypto investors to duly report their gains under the Schedule VDA section of their Income Tax Return (ITR). These changes aim to extend regulatory oversight and promote compliance in digital asset transactions in the country.

The new bill includes virtual digital assets in the category of 'undisclosed income' during searches, along with items like gold and bullion.

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