Cryptocurrency traders in India could incur hefty tax penalties on undisclosed profits due to new amendments under the Income Tax Act, as announced in the Union Budget 2025 by Finance Minister Nirmala Sitharaman. Cryptocurrencies are to be classified as Virtual Digital Assets (VDAs) and will be subject to block assessments for any undisclosed gains, mirroring tax treatments applicable to traditional assets like jewelry and bullion. The changes will take effect retroactively from February 1, 2025. Authorities may enforce a penalty of up to 70% on previously undeclared crypto profits, applicable to gains undisclosed for up to 48 months from the relevant tax assessment year. This move comes amid reports of significant unpaid goods and services taxes linked to the cryptocurrency market in India, raising concerns about compliance and regulatory scrutiny among crypto holders.

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