In a recent development, India’s Finance Minister, Nirmala Sitharaman, announced that cryptocurrencies will now be included under Section 158B of the Income Tax Act, which addresses undisclosed income. This move subjects unreported crypto gains to block assessments, aligning them with the tax treatment of traditional assets such as money, jewelry, and bullion.
The amendment defines crypto assets under the existing category of Virtual Digital Assets (VDAs). As per the new guidelines, a reporting entity, as prescribed under section 285BAA of the Act, is required to furnish information on crypto assets.
Notably, the new crypto tax provisions will be retrospectively applicable from February 1, 2025.
This announcement follows a report from December 2024, where India’s Minister of State for Finance, Pankaj Chaudhary, revealed that the government had identified unpaid goods and services taxes (GST) totaling 824 crore Indian rupees (approximately $97 million) from several crypto exchanges.
In a related context, Indian authorities may impose a tax penalty of up to 70% on previously undisclosed crypto profits. This penalty applies to crypto gains that remained undisclosed for up to 48 months after the relevant tax assessment year. The document specifies a penalty of “70% of the aggregate of tax and interest payable on additional income disclosed in the updated income tax return [ITR].”
These developments come shortly after the Bybit exchange suspended its services in India on January 10, citing regulatory pressures as it seeks a full operational license from India’s Financial Intelligence Unit.
Globally, crypto tax regulations are gaining prominence. In June 2024, the U.S. Internal Revenue Service (IRS) issued new regulations subjecting crypto transactions to third-party tax reporting requirements for the first time. Starting in 2025, centralized crypto exchanges and other brokers in the U.S. will begin reporting sales and exchanges of digital assets, including cryptocurrencies.
These measures reflect a growing international trend toward stricter regulation and taxation of cryptocurrency transactions.
