- Crypto traders across India are cautioned to report their transactions to avoid late penalties.
- India’s Finance Act of 2022 introduced a 30% flat tax on crypto gains.
- Crackdown on crypto traders is facilitated through registered crypto exchanges and P2P platforms.
India’s Income Tax Department has sent notices to 44,057 cryptocurrency traders who it believes failed to report their transactions for the 2025 financial year.
In a massive outreach, authorities have warned traders to update their tax filings to avoid further scrutiny, penalties, or even prosecution.
High-Tech Push for Crypto Tax Compliance
As the government intensifies the scrutiny on crypto transactions using modern technology, including artificial intelligence (AI) and data analytics tools, it has become more difficult for Indian traders to evade.
In a recent parliamentary reply, the tax department revealed that the government has collected ₹269.09 crore (approx. $32.2 million) in taxes from crypto income.
What Are India’s Crypto Tax Rules?
This enforcement action is based on the strict tax regime India implemented in 2022. The rules include a 30% flat tax on all income from virtual digital assets (VDAs) and a 1% Tax Deducted at Source (TDS) on transactions, which helps the government track crypto activity.
The Other Side: While the government is cracking down, Indian exchanges have been calling to fix the tax laws. Here’s what they told CoinEdition.
To facilitate compliance, India’s Financial Intelligence Unit (FIU) has begun issuing operating licenses to exchanges. So far, major global exchanges including Binance, Coinbase, KuCoin, and Bybit, alongside local leader CoinDCX, are among those registered to operate under the FIU’s oversight.
What Are the Penalties for Hiding Crypto Trades?
The penalties for non-compliance are severe. According to the Income Tax Act, an individual who fails to report their cryptocurrency transactions, can be fined 50% of the total tax in dispute.
However, if a trader is found to have deliberately underreported their income on a tax return, the penalty can be as high as 200% of the tax owed.
The Bigger Picture: A 100M-User Market
This crackdown is part of the Indian government’s broader shift from considering a crypto ban to embracing the industry as a significant source of tax revenue.
With a user base of nearly 100 million, India is one of the world’s largest crypto markets, and ensuring compliance is now a major priority for tax collectors. The increasing adoption rate, currently at 7.1% of the population, means this focus on the crypto sector is only set to grow.
Deep Dive: That 100 million user number is huge. A previous CoinEdition analysis separated the facts from the hype on Indian crypto adoption.
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