India Intensifies Crackdown on Crypto Tax Evasion in Latest Compliance Drive
India’s Income Tax Department has launched a fresh enforcement campaign targeting crypto-related tax evasion and money laundering, signaling a stronger push to bring virtual digital asset (VDA) transactions under tax compliance.
Government officials revealed that thousands of individuals and entities engaged in cryptocurrency transactions have received notices from the Central Board of Direct Taxes (CBDT) for failing to fully comply with the Income Tax Act, 1961.
This move comes under the CBDT’s ongoing “NUDGE” initiative, a campaign designed to encourage taxpayers to voluntarily update filings. The latest round focuses on crypto disclosures and follows earlier efforts targeting foreign asset declarations and political donation fraud.
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Since April 2022, all crypto income in India is taxed at a flat 30% under Section 115BBH of the Income Tax Act, with no deductions except for acquisition costs. Losses from VDAs cannot be set off or carried forward.
Authorities are now using advanced data analytics to spot discrepancies between reported income and third-party filings, including TDS statements from crypto exchanges and Virtual Asset Service Providers (VASPs). These mismatches have exposed misreporting, under-declaration, and incorrect deductions.
In many cases, taxpayers failed to include the mandatory Schedule VDA or applied incorrect tax rates—leading to investigations and potential penalties.
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The crackdown comes amid broader scrutiny of the sector. Although India does not recognize cryptocurrencies as legal tender, income from VDAs remains fully taxable. The government has maintained that taxation does not equal legal approval, and a discussion paper on future VDA regulations is underway.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
