Ah, the land of spices, saris, and now, staggering crypto taxes! Cryptocurrency traders in India, those modern-day alchemists, may soon find their digital gold turning to dust under the weight of the government’s new tax amendments. 🪙💔
In a move as subtle as a monsoon, Indian Finance Minister Nirmala Sitharaman has declared that cryptocurrencies will now cozy up under Section 158B of the Income Tax Act. Yes, the same section that deals with undisclosed income—because nothing says “welcome to the club” like a block assessment. 🏦
Under this amendment, crypto gains will be treated with the same tender care as traditional assets like money, jewelry, and bullion. Because, of course, a Bitcoin is just like a gold bar, right? 🤔
Cryptocurrencies will now fall under the definition of Virtual Digital Assets (VDAs), because why not add another acronym to the mix? The amendment states:
“Crypto asset has been defined in section 2(47A) of the Act under the existing definition of Virtual Digital Asset[…] A reporting entity, as may be prescribed under section 285BAA of the Act, will be required to furnish information of crypto asset.”
And here’s the kicker: this new tax proposition will be retrospectively applicable from Feb. 1, 2025. Because nothing says “fair warning” like a retroactive tax. 🎉
At the end of December 2024, India’s Minister of State for Finance, Pankaj Chaudhary, revealed that the government had uncovered 824 crore Indian rupees ($97 million) in unpaid goods and service taxes (GST) by several crypto exchanges. A few months prior, Indian law enforcement agencies had demanded 722 crore Indian rupees ($85 million) in unpaid taxes from Binance. Clearly, the taxman cometh, and he’s not messing around. 💼
As a cherry on top, Indian authorities may issue a tax penalty of up to 70% on previously undisclosed crypto profits. This penalty may apply to crypto gains that remained undisclosed for up to 48 months after the relevant tax assessment year. The document states:
“70% of the aggregate of tax and interest payable on additional income disclosed in the updated income tax return [ITR].”
These amendments come just two weeks after Bybit exchange suspended its services in India on Jan. 10, citing regulatory pressure as it continues to pursue a full operational license from India’s Financial Intelligence Unit. Because who doesn’t love a good regulatory squeeze? 🍋
Crypto tax laws are gaining prominence worldwide, with the US Internal Revenue Service (IRS) issuing new crypto regulations in June 2024. Starting in 2025, centralized crypto exchanges (CEXs) and other brokers will start reporting the sales and exchanges of digital assets, including cryptocurrencies. This decision could push crypto investors to decentralized platforms in a “paradoxical situation” that could make tax revenue harder to track, according to Anndy Lian, author and intergovernmental blockchain expert. 🕵️♂️
In a dramatic twist, the Blockchain Association filed a lawsuit against the IRS in December 2024, arguing that the rules are unconstitutional because they include decentralized exchanges under the “broker” term, extending data collection requirements to them. Because nothing says “freedom” like a good old-fashioned lawsuit. ⚖️
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2025-02-02 16:20