Taxes on cryptos: Budget 2025 has made some major changes in the tax policies on crypto assets. This time, the government has ordered reporting entities, such as banks and crypto exchanges, to do regular reporting of crypto transactions. This reporting will be for both old and future transactions.
No Respite for Crypto Investors
Budget 2025 has given some relief to middle-class taxpayers, but there is no respect for crypto investors. A 30% tax on cryptocurrency income and 1% TDS on crypto transactions has been made. Apart from this, the definition of Virtual Digital Assets (VDA) has been updated to cover assets of crypto and crypto-like technology.
The Budget statement said: “It is proposed that information on transactions of crypto assets will be collected from the prescribed reporting entities. The definition of VDA will be aligned for this.” These amendments will come into effect from 1st April, 2026.
Change in the definition of VDA
Alay Razvi, Managing Partner, Accord Juris said, “Now the definition of VDA includes cryptos and crypto-like technology transactions. This will bring more crypto assets into this category.”
Some Key Points:
Securities Transaction Tax (STT) has not been increased on crypto futures and options (F&O), meaning the tax status will remain the same.
Finance Minister Nirmala Sitharaman has proposed to include Section 285BAA in the Income-tax Act, in which reporting entities will have to provide details of crypto asset transactions.
It has also been said in the budget that now “virtual digital assets” will be included in the undisclosed income, which will also cover income related to gambling, horse racing, and crypto trading.
Crypto Income Pe Tax: What does it mean?
In Budget 2025, the government has maintained 30% tax on crypto income and 1% TDS on transactions. This tax structure is being implemented from 2022, but till now clear guidelines have not been found to regulate crypto. But, by providing a separate section for VDA in the Income Tax Return (ITR) forms, the government’s effort to track crypto transactions is visible.
Impact on Crypto Investors
Sathvik Vishwanath, Co-Founder & CEO, Unocoin (crypto exchange) said, “These policies have not brought any relief to crypto investors. 30% tax and 1% TDS are still applicable, which is affecting liquidity issues and retail participation. No incentives have been given to Web3 startups, which is further dulling investor sentiment.”
Reporting and Penalties:
CA Bimal Jain said, “Now banks and other entities will report regular crypto transactions to the Income Tax Department. Earlier transactions were tracked only when TDS was attracted, but now all crypto transactions can be tracked through AIS.”
CA Sonu Jain told, “Now VDAs have been kept under undisclosed income, meaning if crypto gains are discovered during income tax raid or inquiry, then 60% tax along with 50% penalty can also be imposed.”
So, this is an important reminder for crypto investors to report their crypto gains in the Schedule VDA section of Income Tax Return (ITR), otherwise they may have to face heavy penalties.
Conclusion
Budget 2025 has not made any major changes in crypto taxation, but reporting and compliance rules have been made more strict. If you are a crypto investor, it is important to understand your tax responsibilities, otherwise you may have to face penalties.
