The taxman continued to add on to the regulations in place for crypto assets in Finance Bill 2025. Starting with 1 per cent TDS on all cryptocurrency transactions (if the total value of cryptocurrency trading activities is lesser than ₹50,000 in a financial year), excluding futures and options, and a 30 per cent taxation on gains from such assets, effective July 1, 2022, the government has been vocal on its effort to monitor cryptos.

The insertion of a new section 115BBH, vide the Finance Bill 2022, formalised the inclusion of virtual digital assets (VDA), which includes cryptocurrencies, emphasising the taxation on gains and extending no provision to set-off or carry forward any recognised losses from trading of such VDAs.

New proposal

Now, Finance Bill 2025, has proposed a new section 285BAA in the Income Tax Act, which states that any prescribed entity is required to furnish information in respect of a transaction in such crypto asset in a statement, for such prescribed period, within a prescribed time, in such prescribed manner. While the Budget gives no clear timeline or details, the said tweak also details a possible plan of action, if such information furnished is found to be inaccurate, defective or not made available, which is again open-ended. This entire section is expected to have a clear form and shape only post the passing of the Bill in the Parliament.

Other tweaks include adding VDA to the definition of undisclosed income. The definition of VDA was also enhanced to include any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not already included in the definition of VDA.

The tweaks in the current Finance Bill stand consistent with the past and the way forward looks like enhanced regulations for cryptos and such other VDAs. Though bitcoin has rebounded strong, thanks to the US election results, caution is the word for taxpayers interested in this space, both on the regulatory and volatility front.