- India introduces 1% TDS on crypto transactions below ₹50,000, with 30% tax on gains effective July 2022.
- New section 285BAA requires prescribed entities to report crypto transactions with specific timelines pending.
- Virtual Digital Assets (VDA) definition expanded to include cryptographically secured distributed ledger assets.
- No provision for loss set-off or carry forward in crypto trading under section 115BBH.
- VDAs now included in the definition of undisclosed income for tax purposes.
India’s cryptocurrency regulatory framework continues to evolve as the Finance Bill 2025 introduces stringent reporting requirements and enhanced oversight mechanisms for digital assets, building upon the existing 30% taxation structure implemented in 2022.
The foundation for crypto regulation was laid with the introduction of section 115BBH in 2022, which established a comprehensive taxation framework for Virtual Digital Assets (VDAs). This marked the first formal recognition of cryptocurrencies within India’s tax structure, though without allowing traders to offset losses against other income sources.
The newly proposed section 285BAA represents a significant expansion of regulatory oversight. While specific implementation details await parliamentary approval, the section mandates prescribed entities to report crypto transactions within yet-to-be-determined timeframes. This moves beyond mere taxation into transaction monitoring territory.
In a notable development, the government has broadened the VDA definition to encompass “any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or similar technology”. This expansion ensures comprehensive coverage of emerging crypto assets and blockchain-based financial instruments.
The timing of these regulations coincides with Bitcoin‘s recent surge, attributed to favorable U.S. election outcomes. However, market observers suggest approaching the crypto space with caution, given both regulatory uncertainties and inherent market volatility.
These regulatory changes reflect India’s measured approach to cryptocurrency oversight, balancing between innovation and risk management. The 1% TDS requirement for transactions under ₹50,000 serves as a mechanism for tracking smaller trades while maintaining the broader 30% tax framework for gains.
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