The Income Tax Bill 2025, introduced on February 13, 2025, retains India’s strict cryptocurrency tax framework with minor refinements. While the bill simplifies overall tax language, it disappoints crypto investors hoping for relief. Here’s a breakdown of the crypto tax implications under the new bill.
Key Crypto Tax Provisions Retained
The bill keeps the crypto tax regime introduced by the Finance Act 2022 largely intact, reaffirming the classification of cryptocurrencies and NFTs as Virtual Digital Assets (VDAs) under Section 2(47A) of the original Income Tax Act, 1961.
- 30% Flat Tax on Crypto Gains:
Profits from trading, selling, or transferring VDAs, like Bitcoin, Ethereum, or NFTs, are taxed at a flat 30%. This applies regardless of income slab or holding period, unlike stocks and real estate, where long-term gains enjoy lower rates.
- No Deductions Allowed:
Only the cost of acquisition can be deducted from crypto gains. Expenses like transaction fees, wallet charges, and mining costs remain non-deductible.
- 1% TDS on Crypto Transfers:
Section 194S continues to mandate a 1% Tax Deducted at Source (TDS) on crypto transactions above ₹10,000 (or ₹50,000 for specified cases). This applies to both exchange-based and peer-to-peer transfers.
What’s New in the Income Tax Bill 2025?
While the bill simplifies tax codes, it offers no specific relief for crypto investors. Key takeaways include:
- No Long-Term vs. Short-Term Distinction:
Crypto gains remain taxed at 30% regardless of holding period. This contrasts with traditional assets, where long-term capital gains (LTCG) enjoy lower rates.
- Loss Offset Still Prohibited:
Crypto losses cannot offset gains from other income sources, such as salary or stock market earnings. Losses also cannot be carried forward to future years.
- Reader-Friendly Format:
The bill presents crypto tax provisions using tables and examples. For instance, if you buy 1 Bitcoin for ₹30 lakh and sell it for ₹40 lakh, the ₹10 lakh gain incurs a ₹3 lakh tax (30%).
Why the Crypto Community is Buzzing
The lack of favorable changes has sparked debate within India’s crypto ecosystem. Enthusiasts had hoped for:
- Lower tax rates
- Loss offset provisions
- Reduced TDS obligations
Instead, the government reinforced its cautious stance. This decision contrasts with crypto-friendly hubs like Dubai and Portugal and could further drive trading volumes to offshore platforms.
For example, a trader earning ₹5 lakh in crypto profits still owes ₹1.5 lakh in taxes—unchanged from previous years.
Final Thoughts: Clarity Without Relief
The Income Tax Bill 2025 streamlines tax language but maintains India’s rigid crypto tax framework. With no incentives for long-term investment or loss management, India’s approach prioritizes revenue and oversight over innovation.
As the global crypto landscape evolves, India’s firm stance keeps its community navigating high taxes and strict compliance. For now, crypto investors must continue adapting to this challenging environment.
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