On February 2, 2025, Indian Finance Minister Nirmala Sitharaman announced significant amendments to the country's tax laws affecting cryptocurrency traders. Under the new regulations, cryptocurrencies will be classified as Virtual Digital Assets (VDAs) and included under Section 158B of the Income Tax Act, which governs undisclosed income.
The amendments impose a retrospective applicability starting from February 1, 2025, and allow for block assessments on undisclosed crypto gains, aligning their tax treatment with traditional assets such as money and jewelry. Traders could face penalties of up to 70% on previously undisclosed profits, applicable to gains not reported within 48 months of the relevant tax assessment year.
In December 2024, the Indian government identified ₹824 crore (approximately $97 million) in unpaid goods and service taxes from several crypto exchanges. This follows a demand for ₹722 crore ($85 million) in unpaid taxes from Binance in August 2024. The regulatory changes come shortly after Bybit suspended its services in India on January 10, 2025, due to regulatory pressures.
Globally, interest in crypto tax laws has surged, particularly following new regulations from the US Internal Revenue Service (IRS) that will require centralized exchanges to report digital asset transactions starting in 2025. This could lead to a shift towards decentralized platforms, complicating tax revenue tracking.