Income Tax Rules Revised: Perk Limits Raised, Crypto Reporting Made Tougher

The government has updated key income tax rules, raising thresholds for certain employee perks and introducing stricter reporting requirements for cryptocurrency transactions to improve tax compliance.

What’s New in the Income Tax Rules

The revised income tax framework introduces several important changes that affect salaried individuals, employers, and the fast-growing cryptocurrency sector:

Higher Limits on Employee Perks

• Tax-free benefits provided by employers — such as office meals, gifts, and educational facilities for employees’ family — have seen higher threshold limits, meaning more perks may now be exempt from tax.
• This adjustment aims to ease the tax burden on employees and align perks with rising inflation and cost of living.

Tougher Crypto Reporting Rules

• Platforms dealing in cryptocurrencies and virtual digital assets (VDAs) must now follow structured procedures for information collection, verification and reporting of transactions to tax authorities.
• This change is part of a broader move to tighten compliance and transparency in the digital asset space, aligning reporting norms with global tax and anti-money-laundering standards.

Stricter Framework for Crypto Platforms

New provisions, building on the government’s existing crypto tax regime, are intended to ensure accurate reporting and timely disclosure of cryptocurrency transactions:

• Platforms will need to collect and verify transaction details before sharing them with tax authorities.
• Failure to provide required information accurately could lead to penalties, including daily fines and flat charges for incorrect reporting as proposed under the Income-tax Act compliance framework.
• These measures complement the 30% flat tax on crypto gains and the 1% TDS on transactions introduced in earlier budgets, which remain in force.

Experts say this more detailed reporting requirement is meant to close gaps in compliance and reduce underreporting of crypto income.

Why These Changes Matter

For Salaried Individuals

• By raising perk exemption limits, employees may be able to receive more tax-free benefits, reducing their overall tax outlay.
• Employers also gain clarity on what perks can be offered without triggering income tax liabilities.

For Crypto Traders and Platforms

• Stricter reporting puts pressure on exchanges and crypto businesses to strengthen their compliance infrastructure.
• Traders and investors should be prepared for increased documentation and reporting requirements as part of their annual returns.

Analysts say clarity in reporting could bring more confidence to the Indian crypto market while ensuring that tax authorities have reliable data for enforcement and auditing.

Looking Ahead

The new income tax rules, while mostly focused on compliance and alignment with evolving economic trends, signal that the government is taking a more structured approach to digital asset taxation and employee taxation norms.

Tax experts advise taxpayers and businesses to familiarise themselves with the updated compliance requirements ahead of the next filing season to avoid penalties and take full advantage of the revised perks limits.