Union Budget 2025-26 Upholds Crypto Tax Regime, Proposes New Reporting Measures

The Union Budget 2025-26 has upheld the existing taxation framework for cryptocurrencies, with no major concessions for investors. The government in India continues to enforce a 30 percent tax on gains from crypto transactions and a 1 percent tax deducted at source (TDS) on all virtual digital asset transactions, a measure that was introduced in July 2022.

In a notable development, Finance Minister Nirmala Sitharaman proposed an amendment to the Income Tax Act. The amendment would require a designated reporting entity to disclose transaction details related to virtual digital assets (VDAs).

The Budget document states:

“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 that the definition of virtual digital asset be aligned accordingly.”

This move aims to enhance transparency and monitoring in India’s largely unregulated crypto market.

The budget retained the existing tax structure. The 30 percent tax on crypto gains and the 1 percent TDS remain unchanged. Additionally, the Securities Transaction Tax (STT) will not apply to crypto futures and options. And it will maintain a distinct tax regime for these instruments. In contrast, regulators increased the STT for stock futures and options last fiscal year. However, the government excluded crypto transactions, classifying them as commodities.

Now, the government introduced a dedicated section for VDAs in the Income Tax Return forms for FY 2023-24. This step signals an effort to integrate cryptocurrency transactions into the mainstream tax framework. And it is despite the absence of specific regulations for these digital assets.

Crypto investors welcomed the decision to exempt futures and options from TDS and the 30% tax on gains. However, the overall tax policy still reflects a cautious stance. Section 194S of the Income Tax Act sets the current framework, with additional surcharges and a cess imposed by the Finance Act of 2022 supporting it. These measures highlight the government’s effort to balance innovation with regulatory oversight in the emerging crypto sector.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by Harshajit Sarmah.