New Income Tax Bill: Crypto Earnings To Be Treated as 'Undisclosed Income' During Searches

Alankar Mishra

Author

Updated: 16-04-2025 at 12:40 PM

The new Income tax bill, which is tabled today on February 13, would classify the earnings from cryptocurrency as ‘undisclosed income’ in case there are tax searches, just like the treatment given on gold, bullion, and jewellery. This is intended to further tighten the government’s grip on the taxation of Virtual Digital Assets (VDAs) and curb tax evasion.

Key Highlights On Crypto

Provision	Details
Crypto as Undisclosed Income	Virtual digital assets (cryptocurrencies, NFTs) will now be considered undisclosed income during tax searches.
Definition of Undisclosed Income	Includes money, bullion, jewellery, virtual digital assets, or other valuables, along with unreported transactions or incorrect claims.
Existing Crypto Taxation	No changes—Crypto income will continue to be taxed at 30% without deductions or exemptions.
TDS on Crypto Transactions	A 1% Tax Deducted at Source (TDS) will still apply to digital asset transfers.
Potential Exclusions	The Central Government may exclude certain digital assets from taxation under specified conditions.

Background And Regulatory Intent

The Finance Ministry has been preparing a discussion paper throughout 2023 to solicit views from the industry and stakeholders on crypto taxation and regulation. The bill makes it clear that Non-Fungible Tokens (NFTs) and other similar digital assets are considered Virtual Digital Assets (VDAs) and are, therefore, taxable.

With all the tightening of regulations, the government has made no changes to the 30% tax rate on crypto gains or 1% TDS and remains firm on its position concerning the taxation of digital assets.

Such a development only strengthens India’s guarded stance in terms of cryptocurrency regulations, with the new Income Tax Bill allowing for considerably more scrutiny of crypto earnings that are not declared.

Conclusion

The new tax income rule adds more weight to the government’s firm approach to cryptocurrency taxation by claiming crypto assets as ‘undisclosed earnings’. The Crypto Bill promises more monitoring of crypto assets sales while maintaining the existing harsh limits of the 30% tax and 1% TDS. The changes to the Bill do help provide more clarity and transparency. Digital asset holders need to comply with regulations stringently to avoid having to pay fines.

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