India’s finance minister Nirmala Sitharaman has disclosed that digital assets should be added under undisclosed income in a bid to strengthen cryptocurrency regulations in the country. The finance minister mentioned the new development in her budget proposal, signaling the latest step by the country to tighten cryptocurrency oversight.
During her budget speech, Finance Minister Nirmala Sitharaman did not mention any changes in the previous crypto regulations, meaning that the 30% tax on crypto gains and 1% tax deducted at source (TDS) on transactions still remain.
However, she added a proposal to amend income tax for companies, including crypto firms. This will allow them to disclose transaction details of digital assets, and the move is expected to increase compliance requirements for crypto traders.
India’s finance minister discusses crypto taxation
According to the Indian finance minister, the proposal will amend the tax act, which will mandate entities to provide adequate information about transactions as required. “It is proposed to bring an amendment in the act to provide that a prescribed reporting entity in respect of a crypto-asset shall furnish information in respect of a transaction in such crypto asset, in a statement as prescribed. It is also proposed to align the definition of virtual digital asset accordingly,” she said.
The development did not seem to go down well with some executives, with CoinDCX Co-founder Sumit Gupta relaying concerns about Indian wealth moving out of the country. He mentioned that they had discussed the ambiguity in the TDS Section 194S with the government, which they had failed to look into.
Gupta noted that the government should levy the same 1% TDS on international exchanges. “International exchanges should be obligated to the same 1% TDS as compliant Indian exchanges. As a compliant company, we are disappointed,” he added.
CEO and co-founder of Mudrex Edul Patel also frowned at the lack of revision of the 1% TDS, noting that the inability to offset losses poses challenges to traders. “The Union Budget 2025 has maintained the existing tax structure on VDAs. While regulatory clarity remains, the lack of revisions—particularly on the 1% TDS and the inability to offset losses—continues to pose challenges for investors, traders, and industry in the space,” he said.
Undisclosed VDAs will be taxed at 60%%
During the budget proposal, the minister also mentioned that the term “virtual digital asset” (VDA) will be added to the definition of undisclosed income during the block period. She added that the time limit for completing the block assessment will be 12 months from the end of the quarter after the last authorizations for search or requisition have been carried out.
This means that digital assets or VDAs found during searches will be taxed at 60% without exemptions or deductions. This is similar to how other undisclosed incomes are taxed during searches.
The block period is the specified number of years that the undisclosed income of a taxpayer is considered. It is usually carried out under search and seizure cases (previously governed by Chapter XIV-B of the Income Tax Act, 1961). The block period is usually 10 years after the financial year in which the search was carried out, including the period up to the date of the search. This means that the block period only applies to income that was not disclosed or recorded in the book of accounts and was discovered in a search.
This development comes two years after India announced several anti-money laundering provisions for the crypto sector. The Finance Ministry, in a notice, mentioned that the provisions would cover crypto trading, custody services and other financial services in the industry.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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