Last Updated on February 12, 2025 by IPO Manthan Team
The Indian government has introduced stricter tax regulations for cryptocurrencies under the new Income Tax Bill 2025. The bill, set to be tabled on February 13, categorizes unreported crypto holdings as “undisclosed income,” leading to higher taxes and penalties for non-compliance.
Crypto Transactions in The New Income Tax Bill 2025
Crypto transactions in the new Income Tax Bill 2025 will continue to be taxed at a flat 30% rate. Additionally, the 1% Tax Deducted at Source (TDS) on crypto trades remains unchanged, making compliance more challenging for traders. Investors still cannot offset losses against other gains.
One of the most significant changes is the classification of unreported crypto assets under “undisclosed income.” If tax authorities discover undeclared crypto holdings, they will impose a 60% tax along with a 50% penalty on the tax amount. In some cases, the penalty could go up to 70% if the trader fails to declare gains for up to four years.
The bill also introduces mandatory reporting requirements. Starting April 1, 2026, taxpayers must furnish detailed transaction reports for all crypto activities. Crypto traders using decentralized and global exchanges will need to report their transactions to Indian tax authorities.
Crypto transactions in the new Income Tax Bill 2025 will also be subject to search and seizure procedures. If unreported holdings are found during an audit or raid, they will be taxed at the highest applicable rate. These rules will apply retroactively from February 1, 2025, meaning past transactions could come under scrutiny.
The definition of virtual digital assets (VDAs) has also been expanded under the Income Tax Act. It now includes all crypto assets based on cryptographic security and distributed ledger technology, ensuring broader regulatory coverage.
Despite calls for relief, the government has not reduced the 30% tax or the 1% TDS on crypto transactions in the new Income Tax Bill 2025. The strict tax structure and penalties highlight the government’s firm stance on crypto regulation, focusing on compliance and transparency.
Crypto investors in India now face greater scrutiny, with heavy penalties for non-disclosure. As regulations tighten, traders must ensure complete tax compliance to avoid severe financial consequences.