Reports have emerged that India will review its approach to crypto following Donald Trump’s friendlier attitude to the sector.
According to Reuters, Ajay Seth, India’s Economic Affairs Secretary, has said the government is revisiting its stance following changes in how other jurisdictions treat the asset class.
A Change In Approach
In a Sunday interview with the publication, Seth is quoted saying:
“More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of usage, their acceptance, and the importance they see in crypto assets. In that stride, we are having a look at the discussion paper once again.”
He also added that because borders do not limit crypto, India’s approach to it cannot be one-sided.
The review could further delay the publication of India’s discussion paper on digital assets, initially scheduled for release in September 2024. The document was put on hold last year due to other priorities but is meant to address how to regulate crypto in India.
Presently, the asset class is only covered under anti-money laundering (AML) and electronic funds transfer (EFT) laws. The paper is expected to explore expanding the scope of regulation and determining the appropriate policy stance.
This review follows developments in the United States caused by President Trump’s embrace of the industry. His more lenient approach, which includes appointing crypto-friendly figures to head key departments and agencies overseeing the sector and creating a task force to explore the feasibility of a national virtual currency reserve, has reignited optimism for its future in global markets.
New Tax Laws to Penalize Undisclosed Crypto Profits
At the same time, India’s crypto traders may face significant penalties for previously undisclosed profits under new amendments to the country’s tax laws.
In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced that digital assets would fall under Section 158B of the Income Tax Act, which governs undisclosed income. This change will subject crypto gains to block assessments if not reported, treating them similarly to traditional assets like money, jewelry, and precious metals.
The new tax provisions will apply retroactively from February 1, 2025. Crypto will also be classified as a Virtual Digital Asset (VDA) under the altered tax code, which requires reporting entities to disclose crypto information as outlined in Section 285BAA of the Income Tax Act.
India began taxing digital assets in 2022, imposing a 1% tax-deducted-at-source (TDS) on crypto transactions and a 30% capital gains duty. Despite calls from the sector for clarity and easing of regulations, the government has continued its strict approach.
In December 2024, India’s Minister of State for Finance, Pankaj Chaudhary, reported discovering $99.1 million in unpaid goods and services taxes (GST) by crypto exchanges, including Binance and WaziriX. This followed a demand from Indian law enforcement for $86 million in unpaid taxes from Binance in August 2024.
