The Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on February 1st, 2025 at 11:00 AM before the Parliament. Outlining crucial steps to regulate the virtual digital asset (VDA) sector. Among the significant measures was the expanded definition of VDAs, aimed at bringing more clarity to the rapidly evolving digital assets space.
A key move was the proposal of stricter compliance regulations, which would require specified entities such as crypto exchanges to submit detailed transaction information. Effective from April 1, 2026, these entities will be mandated to file reports on crypto transactions in a prescribed format and within a defined timeframe. Any inaccuracies in the filings must be corrected within a specific period, or they could face penalties for submitting incorrect information. This step aims to strengthen the government’s ability to track and regulate digital asset transactions.
Read More: Union Budget 2025: Key Highlights
Additionally, the Budget outlined a broader approach by extending the definition of VDAs to include any crypto asset that utilizes cryptographically secured distributed ledger technology. This ensures that all types of digital assets, even those not explicitly mentioned earlier, fall under the tax framework, enhancing regulatory oversight.
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While the Budget 2025 did not introduce changes to the existing tax structure for VDAs, the government continues to enforce a 30% tax on crypto gains, along with a 1% tax deducted at source (TDS) on transactions above Rs 10,000. Industry leaders had hoped for some relaxation in the tax burden, such as reducing the TDS rate or allowing for loss offsets, which could have encouraged more active participation in the domestic market. However, these expectations were not met, leaving the crypto industry to grapple with the current tax regime, which has led many investors to shift their activities to offshore platforms.
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In line with international efforts, India was also included in the Crypto Asset Reporting Framework (CARF), which aims for the automatic exchange of tax-relevant information across jurisdictions. This inclusion reflects India’s commitment to global standards in crypto regulation and tax compliance.
Despite the disappointment in the sector over the lack of tax revisions, the Budget’s focus on governance and clearer reporting for VDAs was seen as a positive step toward enhancing transparency and reducing the potential for illicit activities. As India pioneers widespread crypto adoption, these regulatory measures are key to ensuring a sustainable and well-regulated digital asset market.
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