Budget 2025 impact on cryptocurrency taxation: Has anything changed for Bitcoin, other crypto investors?

"It is proposed to bring amendment in the Income Tax Act to provide for that a prescribed reporting entity in respect of a crypto-asset shall furnish information in respect of a transaction in such crypto asset, in a statement as prescribed. It is also proposed to align the definition of virtual digital asset accordingly," the Budget document reads.

No changes in crypto taxation

The budget did not reduce the 30% tax on crypto income or the 1% TDS on crypto transactions, which were introduced in July 2022.

The government has not extended Security Transaction Tax (STT) to crypto futures and options (F&O), maintaining the existing taxation structure.

While cryptocurrencies remain unregulated in India, the introduction of a separate section for VDAs in ITR forms for FY 2023-24 signalled the government’s intent to track crypto transactions.

Finance Minister Nirmala Sitharaman in the last Budget kept crypto futures and options out of the ambit of a hike in Security Transaction Tax (STT).

In Budget 2024, the minister increased STT on stock futures and options contracts. There was no mention of crypto F&O contracts as crypto transactions are categorised as commodities.

Crypto investors also welcomed the government’s move not to impose any tax deducted at source (TDS) and 30% crypto gains tax on the futures and options segment.

The government from July 1, 2022, imposed 1% TDS on all virtual digital assets like cryptocurrencies under Section 194S even as there is a lack of regulation for new-age assets.

The TDS on payment during the transfer of virtual digital assets was imposed to bring these assets under the tax structure. The Finance Act 2022 also brought 30% tax rate plus an applicable surcharge and a 4% cess for taxpayers for any income from the transfer of Virtual Digital Assets (VDAs).

Cryptocurrencies or blockchain technologies are currently still unregulated in the country.

Crypto F&O is treated as business income for taxation and income from normal crypto assets attracts taxes at par with the speculative income tax rate.

The government introduced a separate section – Schedule - Virtual Digital Assets— in the ITR forms for FY 2023-24. The section was introduced for reporting gains from all virtual digital assets however ambiguity remained on Crypto F&O transactions which may not be treated as VDA.

The Indian crypto industry expected the Budget 2025 to bring some policy clarity on cryptocurrencies in line with the global regulatory framework. The industry experts were also hopeful of a revision of 30% tax on crypto income and the 1% TDS to increase investor participation. It has been a longstanding demand of the industry to recognise cryptocurrencies as a formal asset class with the appropriate classification. The crypto experts also expected tax relief and policy measures to support new-age startups, which rely on emerging technologies like blockchain, AI and Web3 ecosystem.