India Imposes 70% Tax Penalty on Undeclared Crypto Gains

India enforces a 70% tax penalty on undeclared crypto gains, applying retroactively from February 2025. Compliance is mandatory to avoid heavy fines.

The Indian government will introduce new tax laws in 2025 targeting undeclared cryptocurrency gains. The proposed tax legislation introduces a 70% penalty tax for undisclosed profit earnings. The new legislation extends to hidden financial gains that accumulated during the previous 48 months.

During the 2025 federal budget announcement, Finance Minister Nirmala Sitharaman presented this transition. The section 158B of Income Tax Act embraces Cryptocurrency as a taxable asset. A new amendment demands crypto holders to evaluate their unreported profit gains in the same manner they assess traditional assets including currency, jewelry and bullion.

Virtual Digital Assets (VDA) now hold official classification within the new piece of legislation. The Income Tax Act through Section 2(47A) contains an existing definition of crypto assets. Any organization dealing with crypto transactions needs to file reports through Section 285BAA. The objective of this initiative is both to showcase records and meet tax regulations properly.

The government developed a serious negative outlook about cryptocurrency profits that remain unreported for taxation purposes. Every crypto owner must be aware that failure to report previously undiscovered crypto transactions may result in a 70% tax penalty from authorities. The government plans to impose this tax on cryptocurrency gains from the previous 48 months before the assessment year. Accrued income revealed through revised Income Tax Returns (ITRs) will be taxed with a total amount including penalties and interest at 70% per the official declaration.

India Enforces Retroactive Crypto Tax Policy from February 2025

The proposed assessment date for the taxation policy started from February 1, 2025 and runs retroactively. The government’s tax rule change represents more intense financial monitoring of cryptocurrencies while working to stop illicit tax activities in India’s crypto market.

The Findings of unpaid Goods and Services Taxes (GST) totaling 824 crore Indian rupees ($97 million) from multiple cryptocurrency exchanges were reported by India’s Minister of State for Finance Pankaj Chaudhary at the end of December 2024.

The discovery happened after government authorities conducted a major tax enforcement action in August of 2024. At that time Binance received a tax demand for 722 crore Indian rupees ($85 million) from Indian law enforcement agencies while operating as one of the world’s biggest cryptocurrency exchanges.

These recent tax modifications establish enhanced Indian government control over cryptocurrency transaction activities. Planned compliance by Bitcoin investors and cryptocurrency exchanges has become mandatory to stay clear of significant financial fines. The future of digital assets might face increasing taxation under additional regulatory oversight from authorities.