Key Highlights
- 44,000+ crypto traders flagged for not reporting gains to the Income Tax Department.
- ₹888.82 crore ($99.9 million) in undisclosed crypto income detected during raids and cross-checks.
- Anti-money-laundering enforcement sees ₹4,189.89 crore ($46.6 billion) in seized crypto-linked assets.
The Indian government has stepped up its enforcement efforts in the cryptocurrency sector, issuing more than 44,000 tax notices to people who bought and sold digital assets but did not report their earnings in Income Tax Returns (ITRs). Officials say this crackdown has already uncovered hundreds of crores in undisclosed income.
“The government has told Parliament that over 44,000 tax notices have been issued to people who traded in crypto but did not report it in their Income Tax Returns,” officials stated.
The move highlights the scale of unreported cryptocurrency trading in India and signals that the era of “quietly trading under the radar” is coming to an end.
Crypto remains unregulated, but is closely monitored
India does not yet have a dedicated law regulating cryptocurrencies. However, authorities are monitoring the sector actively. As these assets are inherently borderless, they require strong international coordination to prevent regulatory arbitrage.
“Therefore, any regulatory framework for crypto assets can be effective only with significant international collaboration on the evaluation of the risks and benefits and the evaluation of common taxonomy and standards,” the government told Parliament.
While formal regulations are still in development, the government has tools and mechanisms to detect irregularities and enforce compliance.
Undisclosed income comes to light
The Income Tax Department’s recent searches have brought to the surface ₹888.82 crore ($99.9 million) worth of cryptocurrency income that was never reported. Officials say they were able to identify the mismatch after comparing actual trading activity with what individuals declared in their tax returns.
Once the gaps became clear, thousands of notices were issued to ensure those who profited from crypto trading were held accountable.
To keep an eye on this space, the department is using tools like Project Insight, internal data analytics, and TDS information submitted by crypto exchanges. Matching these records with ITR data allows the authorities to detect those who have not been paying the required taxes.
Money laundering and law enforcement
Cryptocurrencies are now firmly under the Prevention of Money Laundering Act (PMLA), 2002. This means Virtual Asset Service Providers (VASPs) must report both routine transactions and any suspicious activity to the Financial Intelligence Unit – India (FIU-IND). These reports are then examined and passed on to law enforcement agencies whenever required.
The Enforcement Directorate (ED) has already cracked down on several cases that involved digital assets. So far, assets valued at ₹4,189.89 crore ($46.6 billion) have been seized or frozen, 29 individuals have been arrested, and 22 prosecution complaints have been filed. One of the accused has even been declared a Fugitive Economic Offender.
Authorities have also reminded the public that other laws, including the Prohibition of Benami Property Transactions Act and the Black Money Act, apply to crypto investments when violations occur.
Treating crypto like any other asset
In the eyes of the law, crypto behaves much like any traditional asset. If someone attempts to hide these holdings or park them under another person’s name, action can be taken under the Benami Act.
Undisclosed digital assets held overseas can also lead to action under the Black Money Act, showing that crypto is treated like any other taxable asset.
To keep up with fast-moving digital finance, the government is strengthening its investigation skills. Officers are being trained in blockchain tracking, cyber laws, and digital forensics. Institutions such as NFSU Goa are helping them learn how to trace transactions and collect solid electronic evidence in crypto-related cases.
A rapidly growing crypto market
India’s cryptocurrency market is still growing, even as regulations get tighter and authorities increase oversight. The Ministry of Finance says that crypto transactions in 2024–25 crossed ₹51,180 crore ($5.69 billion), compared with ₹36,270 crore ($4.04 billion) in 2023–24 and ₹22,130 crore ($2.46 billion) in 2022–23.
More people are taking part in the market, and many are treating cryptocurrencies as long-term investments rather than just quick ways to make money.
TDS collections highlight compliance
To make crypto trading more transparent, the government introduced a 1% TDS on crypto transfers under Section 194S of the Finance Act, 2022. This helps authorities keep track of trades more effectively.
TDS collections have been rising steadily:
- FY 2022–23: ₹221.3 crore ($24.6 million)
- FY 2023–24: ₹362.7 crore ($40.3 million)
- FY 2024–25: ₹511.8 crore ($57 million)
In the last three years, the government has collected over ₹1,095 crore ($121.9 million) from crypto transactions in total. This shows that more people are following the rules and declaring their earnings instead of keeping them off the record.
Even though cryptocurrencies operate on decentralized networks, they are no longer beyond government oversight. Tax notices are being sent out, anti-money laundering checks are in place, and officials are being trained to investigate crypto transactions.
Also Read: Hong Kong Begins Public Consultation on Crypto Tax Reporting Rules
