For those who earned from crypto without paying taxes, Union Budget 2025 has come as a big shock! Finance Minister Nirmala Sitharaman has proposed to officially include “virtual digital assets” in the definition of undisclosed income. Its simple meaning is that if someone does not disclose his crypto earnings, then now he can come under the radar of the government.
Government’s tough stance on crypto
The government has already had a tough stance on crypto. In the 2022 Budget, 30% tax was imposed, in which no deduction was allowed, except for the acquisition cost. Along with this, a 1% TDS was also introduced, which applies to transactions above a certain limit.
But now the government is setting new investigation rules and clear timelines to bring more strictness on undisclosed crypto wealth. That is, if someone has not reported crypto gains in the previous financial years, then now he can come under the target of income tax authorities.
Crypto: Currency or Asset?
Sitharaman has already clarified that crypto can be an asset or an investment tool, but it is not a legal tender in any way. The government believes that digital assets can be traded and invested, but it cannot be treated like a currency.
Now that virtual digital assets are being put in the category of undisclosed income, it will have a direct impact on compliance and tax reporting. Those who have been earning profits from crypto without paying taxes till now, now the threat of new tax audits and penalties has increased for them!
If you are also a crypto investor or trader, then this new rule can directly impact you. Now it is going to be difficult to keep crypto as “hidden wealth”!