Mumbai, February 3: Union Budget 2025-26 offered tax relief to people with an income of up to INR 12 lakh; however, it did not do the same for the income from crypto trading. The crypto investors were hoping to get some relief from the budget announcement by India’s Finance Minister Nirmala Sitharaman; however, the taxation policies on VDAs (Virtual Digital Assets) remained the same, with huge taxes and penalties. Mumbai, February 3: Union Budget 2025-26 offered tax relief to people with an income of up to INR 12 lakh; however, it did not do the same for the income from crypto trading. The crypto investors were hoping to get some relief from the budget announcement by India’s Finance Minister Nirmala Sitharaman; however, the taxation policies on VDAs (Virtual Digital Assets) remained the same, with huge taxes and penalties.
Besides continuing the same polices, FM Nirmala Sitharaman proposed adding a new section in the Income-Tax Act 1991. In India, Bitcoin, Ethereum and other cryptocurrency have become more than just digital assets. The crypto market has become a trading opportunity for Mehul Choksi Arrested: Belgium Police Detain Fugitive Diamond Trader on India’s Extradition Request, Say Reports
Besides continuing the same polices, FM Nirmala Sitharaman proposed adding a new section in the Income-Tax Act 1991. In India, Bitcoin, Ethereum and other cryptocurrency have become more than just digital assets. The crypto market has become a trading opportunity for the Indian investors that offer higher value and gains amid the global market fluctuations. Government Likely To Unveil Draft of New Income Tax Bill on February 6.
Investors in popular crypto assets are compelled to pay a 30% flat tax on the transfer of VDAs with applicable surcharges and 1% TDS on the transactions as per The Financial Act 2022 framework. This continuation of the policies will discourage crypto investors as it creates liquidity issues. The Union Budget 2025 broadened the definition of virtual digital assets and stated that any such crypto asset had digital value that relied on the secure ledger or other technology that validated the transactions.
The salaried individuals will have to pay 1% TDS on the VDA transfer when the amount exceeds 10,000. For business people, that limit exceeds to 50,000. The individual dealing in more than two cryptocurrencies will have to submit a 30% tax on the sale of each asset. This means that if investors cannot adjust the losses of one cryptocurrency, such as Bitcoin, to the sale of another, like Ethereum, If any individual incurred a loss from Bitcoin sale against the listed shares, he would have to pay 12.5% taxes on the shares as capital gains in the long term.
Crypto traders must report their earnings from VDAs in Schedule VDA in the applicable ITR. They will have to disclose the details by adding the acquisition date, transfer date, acquisition cost and received consideration. If one fails to report the VDA income, they will be liable to pay penalties and interest implications on the unpaid taxes. The unreported cryptocurrency gains could face an income tax raid, and the tax authorities may impose a 60% tax and a 50% penalty on the tax amount.
Finance Minister Nirmala Sitharaman proposed adding Section 285BAA to the Income Tax Act of 1961. It will make it mandatory to furnish transaction details. She further said that the VDAs or virtual digital assets should be included in the ‘undisclosed income’ of the block period, such as income from gambling and horse racing. Finance Minister Nirmala Sitharaman Announces National Manufacturing Mission To Boost ‘Make in India’ Initiative Across Industries in Union Budget 2025-26.
The block assessment period completion is proposed to be 12 months from the end of the quarter when the last authorisation or requisition was added. The Indian government expanded the definition of virtual digital assets in Section 2 (47a), stating, “Crypto-assets that rely on cryptographic security and distributed ledger technology”. So, the VDAs are classified as ‘undisclosed income’ under the Income Tax Act of 1961.
(The above story first appeared on LatestLY on Feb 03, 2025 01:51 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
(The above story first appeared on LatestLY on Feb 03, 2025 01:51 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
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Income Tax on Crypto Currency: What Are New Compliances Introduced for Crypto Investors in Union Budget – LatestLY
