India Steps Up Tax Monitoring on Crypto and Cloud Storage Services
Budget 2025 also classifies virtual digital assets such as cryptocurrencies and NFTs as part of undisclosed income in search cases, attracting higher tax scrutiny
In a significant move to tighten financial oversight, India has enhanced its tax monitoring framework targeting the rapidly growing cryptocurrency and cloud storage sectors. This step aims to ensure better compliance and transparency as digital assets and cloud services become more widespread. With the government’s increased focus on these areas, authorities plan to...
In a significant move to tighten financial oversight, India has enhanced its tax monitoring framework targeting the rapidly growing cryptocurrency and cloud storage sectors. This step aims to ensure better compliance and transparency as digital assets and cloud services become more widespread.
With the government’s increased focus on these areas, authorities plan to track transactions more closely, safeguarding the economy against tax evasion and promoting fair practices among service providers and users alike.
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As cryptocurrencies continue to gain popularity and cloud storage becomes indispensable for both businesses and individuals, this enhanced tax surveillance signals India’s commitment to regulating emerging technologies responsibly, while securing rightful revenue streams.
Industry experts see this as a necessary step in bringing accountability and trust to the digital economy, balancing innovation with regulatory compliance. From April 1, 2026, digital evidence will become crucial in investigations, enhancing authorities’ ability to identify tax evasion more effectively.
- Access to crypto wallets will be limited to income tax raids only, reinforcing government control over digital assets.
- Cryptocurrency transactions in India are subject to a flat 30% tax on profits under Section 115BBH of the Income Tax Act, with no deductions allowed except the cost of acquisition.
- A 1% Tax Deducted at Source (TDS) applies on crypto transactions above specified thresholds (₹50,000 annually or ₹10,000 in some cases) to improve tax tracking and transparency.
- Reporting obligations for crypto transactions have been widened under Section 285BAA, requiring entities dealing in virtual digital assets (VDAs) like crypto exchanges to furnish detailed transaction data to tax authorities, with provisions for correcting errors within a 30-day window. This is similar to the reporting regime for traditional financial institutions.
- Budget 2025 also classifies virtual digital assets such as cryptocurrencies and NFTs as part of undisclosed income in search cases, attracting higher tax scrutiny.
- The government plans to implement the OECD's Crypto-Asset Reporting Framework (CARF) to expose undeclared offshore crypto holdings and curb tax evasion.
- Alongside cryptocurrency, the tax surveillance of cloud storage services has been enhanced to ensure compliance in this growing digital sector.
These measures collectively signify India's commitment to strengthening tax compliance in the evolving digital economy, safeguarding revenue, and promoting accountability without banning cryptocurrencies, which remain legal to hold and trade under strict regulation. This enhanced framework aims to balance innovation with responsible regulation, fostering transparency in crypto and digital sectors while reducing illicit financial activities.
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