This is going to be a major pain in the ass for all the cryptoholders... It totally denies the basic fundamentals of bitcoins like privacy. I can't really see where they're trying to go with it (I mean long-term consequences because I think that any rise in paid taxes will only be temporary) :/ One question though: how high is the income tax in India? I'd have a broader view on the situation.
RE: Only 1.7% ie. 20 Million Indians out of 1.27 Billion pay Income Tax. Govt. trying to hit on 80 Million Crypto-Currency Traders