Crypto Profits: The Budget Bombshell
Have you traded in cryptocurrencies in India in the last 48 months (4 years)? Then the Union Budget 2025 has a significant announcement for you. In her latest Budget, Finance Minister Nirmala Sitharaman has tightened the tax grip on crypto trading.
FM Sitharaman has introduced key provisions which will have a significant impact on crypto trading in India. The first one is the regarding the definition of crypto assets – with the new definition crypto assets will be treated at par with other financial assets, and will attract same level of scrutiny and reporting obligations. The second key provision is making it mandatory for exchanges and other financial institutions involved in crypto trading to file detailed transaction reports under Section 285BAA of the Income Tax Act. And the third one is regarding penalties. If you fail to declare your crypto profits, and file the return later, you could attract up to 70% tax and interest.
What The FM Said
In her budget speech the FM said, “Obligation to furnish information in respect of crypto-asset: It is proposed to bring amendment in the Act to provide for that a prescribed reporting entity in respect of a crypto-asset shall furnish information in respect of a transaction in such crypto asset, in a statement as prescribed. It is also proposed to align the definition of virtual digital asset accordingly.”
Budget Document: Crypto Definition
In section 2 of the Income-tax Act,–– Amendment of (c) in clause (47A), after sub-clause (c) and before the proviso, the following sub-clause shall be inserted with effect from the 1st April, 2026, namely:–– “(d) any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not such asset is included in sub-clause (a) or sub-clause (b) or sub-clause (c):”
Budget Document: Crypto Reporting
After section 285BA of the Income-tax Act, the following section shall be inserted with effect from the 1st April, 2026, namely:–– Insertion of new section 285BAA. ‘285BAA.(1) Any person, being a reporting entity, as prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority, as prescribed. Obligation to furnish information on transaction of crypto-asset.(2) Where the prescribed income-tax authority considers that the statement furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such statement and give him an opportunity of rectifying the defect within thirty days from the date of such intimation or such further period as may be allowed, and if the defect is not rectified within such period, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement.(3) Where a person who is required to furnish a statement under sub-section (1) has not furnished the same within the specified time, the prescribed income-tax authority may serve upon such person a notice requiring him to him to furnish such 55 statement within a period not exceeding thirty days from the date of service of such notice and he shall furnish the statement within the time specified in the notice.(4) If any person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under subsection (3), comes to know or discovers any inaccuracy in the information provided in the statement, he shall within ten days inform the prescribed income-tax authority, the inaccuracy in such statement and furnish the correct information in such manner as prescribed.(5) The Central Government may, by rules prescribe— (a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority; (b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and (c) the due diligence to be carried out by the persons referred to in sub-section (1) for the purpose of identification of any crypto-asset user or owner. (6) In this section, “crypto-asset” shall have the meaning assigned to it in sub-clause (d) of clause (47A) of section 2It is also proposed to amend the clause (47A) of the said section to provide that the definition of virtual digital asset includes any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not already included in the definition of virtual digital asset. This amendment will take effect from 1st April, 2026.
Budget Document: Updated Returns
Clause 40 of the Bill seeks to amend section 140B of the Income-tax Act relating to tax on updated return.Sub-section (3) of the said section provides the computation of additional income-tax payable for the purposes of updated return. It, inter alia, provides that 25% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return upto twelve months from the end of the relevant assessment year. However, 50% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of twelve months from the end of the relevant assessment year but before completion of twenty-four months from the end of the relevant assessment year.It is proposed to amend the said sub-section prescribing additional income-tax on updated return by inserting clauses (iii) and (iv) so as to provide that 60% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of twenty-four months from the end of the relevant assessment year but before completion of thirty-six months from the end of the relevant assessment year. Further, 70% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of thirty-six months from the end of the relevant assessment year but before completion of forty-eight months from the end of the relevant assessment year.This amendment will take effect from 1st April, 2025.
Have you traded in cryptocurrencies in India in the last 48 months (4 years)? Then the Union Budget 2025 has a significant announcement for you. In her latest Budget, Finance Minister Nirmala Sitharaman has tightened the tax grip on crypto trading.
FM Sitharaman has introduced key provisions which will have a significant impact on crypto trading in India. The first one is the regarding the definition of crypto assets – with the new definition crypto assets will be treated at par with other financial assets, and will attract same level of scrutiny and reporting obligations.
The second key provision is making it mandatory for exchanges and other financial institutions involved in crypto trading to file detailed transaction reports under Section 285BAA of the Income Tax Act. And the third one is regarding penalties. If you fail to declare your crypto profits, and file the return later, you could attract up to 70% tax and interest.
What The FM Said
In her budget speech the FM said, “Obligation to furnish information in respect of crypto-asset: It is proposed to bring amendment in the Act to provide for that a prescribed reporting entity in respect of a crypto-asset shall furnish information in respect of a transaction in such crypto asset, in a statement as prescribed. It is also proposed to align the definition of virtual digital asset accordingly.”
Budget Document: Crypto Definition
In section 2 of the Income-tax Act,–– Amendment of (c) in clause (47A), after sub-clause (c) and before the proviso, the following sub-clause shall be inserted with effect from the 1st April, 2026, namely:–– “(d) any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not such asset is included in sub-clause (a) or sub-clause (b) or sub-clause (c):”
Budget Document: Crypto Reporting
After section 285BA of the Income-tax Act, the following section shall be inserted with effect from the 1st April, 2026, namely:–– Insertion of new section 285BAA. ‘285BAA.
(1) Any person, being a reporting entity, as prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority, as prescribed. Obligation to furnish information on transaction of crypto-asset.
(2) Where the prescribed income-tax authority considers that the statement furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such statement and give him an opportunity of rectifying the defect within thirty days from the date of such intimation or such further period as may be allowed, and if the defect is not rectified within such period, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement.
(3) Where a person who is required to furnish a statement under sub-section (1) has not furnished the same within the specified time, the prescribed income-tax authority may serve upon such person a notice requiring him to him to furnish such 55 statement within a period not exceeding thirty days from the date of service of such notice and he shall furnish the statement within the time specified in the notice.
(4) If any person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under subsection (3), comes to know or discovers any inaccuracy in the information provided in the statement, he shall within ten days inform the prescribed income-tax authority, the inaccuracy in such statement and furnish the correct information in such manner as prescribed.
(5) The Central Government may, by rules prescribe— (a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority; (b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and (c) the due diligence to be carried out by the persons referred to in sub-section (1) for the purpose of identification of any crypto-asset user or owner. (6) In this section, “crypto-asset” shall have the meaning assigned to it in sub-clause (d) of clause (47A) of section 2
It is also proposed to amend the clause (47A) of the said section to provide that the definition of virtual digital asset includes any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not already included in the definition of virtual digital asset. This amendment will take effect from 1st April, 2026.
Budget Document: Updated Returns
Clause 40 of the Bill seeks to amend section 140B of the Income-tax Act relating to tax on updated return.
Sub-section (3) of the said section provides the computation of additional income-tax payable for the purposes of updated return. It, inter alia, provides that 25% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return upto twelve months from the end of the relevant assessment year. However, 50% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of twelve months from the end of the relevant assessment year but before completion of twenty-four months from the end of the relevant assessment year.
It is proposed to amend the said sub-section prescribing additional income-tax on updated return by inserting clauses (iii) and (iv) so as to provide that 60% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of twenty-four months from the end of the relevant assessment year but before completion of thirty-six months from the end of the relevant assessment year. Further, 70% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of thirty-six months from the end of the relevant assessment year but before completion of forty-eight months from the end of the relevant assessment year.
This amendment will take effect from 1st April, 2025.
