Crypto Tax Relief Hopes Grow as India Revamps Income Tax Bill

Crypto Tax Burden May Ease as India Plans to Present New Tax Bill

The Indian government has withdrawn the Income Tax Bill 2025, stating that a new version will be introduced to the Parliament on August 11. The bill will replace the existing Act, which has been in existence since 1961. 

The shift has attracted the attention of the digital assets world. Hopes are there that it could bring some relief from the existing Crypto tax regulations.

Source: X (Previously Twitter) 

Currently, income from digital currencies, such as Bitcoin and Ethereum, are subject to a uniform 30% Crypto tax, in addition to a 1% TDS on transactions exceeding ₹10,000. 

A lot of traders opine that the regulations related to Crypto tax render it difficult to trade actively and encourage some to seek alternative overseas options.

A Crackdown on Unreported Cryptocurrency Income

As discussion of the new bill makes headlines, the government has been engaged in implementing current laws. The Income Taxation Department recently issued more than 44,000 notices to individuals who did not report their cryptocurrency transactions in their income taxation filings.

Officials added that investigators found ₹630 crore worth of undisclosed digital assets during search and seizure operations. Officials said that they traced these funds through wallet addresses, blockchain records, and exchange data. The government message is clear: non-reporting of gains will not be tolerated.

The Legal but Unsettled Status of Digital Assets

Cryptocurrency trading in India remains in a state of ambiguity. It is not banned in India, but on the other hand it is not regulated either. Exchanges within the country have to register with the Financial Intelligence Unit (FIU-IND). The traders are supposed to be followed by every levy and anti-money laundering regulation.

This ambiguous stance has made many investors uncomfortable. Despite pleas to reduce the Crypto tax, however, the finance ministry has given no indication of adjusting the rates as of now.

The COINS Act 2025 – A Turning Point

One of the developments that might define the future is the draft India COINS Act 2025. The proposal is aimed at providing the sector a legal framework. It presents concepts such as exempting specific transactions from taxation. 

It enables investors to manage their own digital assets, and establishes an independent regulator known as the Crypto Asset Regulatory Authority (CARA).

The bill draws inspiration from international models like Singapore's sandbox initiative and the EU's MiCA legislation. If passed, it would possibly render the market more transparent and secure for investors.

India's Rising Cryptocurrency Presence

It is not going to be an easy thing, but India is already a significant presence in the global cryptocurrency economy. Indian investors are reportedly sitting on almost 1 million Bitcoins, which is the second-largest amount after the United States. A large majority of these coins are possessed by small-time investors, not big institutions. 

Nevertheless, a prohibitive Crypto tax system and absence of regulations are preventing entry of the bigger players into the market. The new income taxation bill will be closely monitored whether it will alter this or not.

Final Word

In the meantime traders are stuck between tight Crypto tax collection and weak regulations. The withdrawal of the Income Taxation Bill 2025 provides an opening to new ideas but until the new draft is debated in Parliament. Till then, no one really knows whether Crypto tax relief is really about to happen.