Indian cryptocurrency investors will face harsh tax penalties as the government implements new rules targeting undeclared gains. Undisclosed bitcoin gains may be subject to a penalty of up to 70% under the revised Income Tax Act, which goes into effect February 1, 2025.
The revision includes cryptocurrencies in Section 158B of the Income Tax Act, classifying them as a Virtual Digital Asset (VDA). This subjected cryptocurrency profits to the same scrutiny as conventional financial assets like currency, gold, and jewelry. Investors who fail to disclose their cryptocurrency earnings within the specified time window may risk retrospective taxation and heavy penalties.
Authorities have increased their monitoring of the cryptocurrency business, particularly after recent investigations revealed almost $97 million in unpaid Goods and Services Tax (GST) by numerous cryptocurrency exchanges. The Indian government’s strict position on tax compliance has already prompted some worldwide exchanges, such as Bybit, to stop operations in the nation due to regulatory concerns.
Crypto holders should ensure full tax compliance to avoid severe financial consequences. With international rules tightening in numerous areas, notably the United States, India’s recent step points to a growing trend of greater monitoring of digital assets globally.
