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India Cracks Down on Crypto Traders for Undisclosed Income: 44,000+ Notices Sent |
In a significant regulatory move, India’s Income Tax Department has launched a widespread crackdown on crypto traders who failed to declare their digital asset transactions in their Income Tax Returns (ITRs). This action marks one of the largest enforcement efforts targeting the crypto industry in India.
According to a recent statement from the Ministry of Finance, the Central Board of Direct Taxes (CBDT) identified widespread non-compliance related to Virtual Digital Assets (VDAs), triggering a wave of reassessment notices, seizures, and warnings across the country.
India Targets Undisclosed Crypto Transactions with Reassessment Notices
Finance Minister Pankaj Chaudhary confirmed that legal actions are underway under the Income Tax Act, 1961 against individuals who failed to report their crypto activity. These include:
- Reassessment of income
- Seizure operations
- Automated cross-checking using AI and big data tools
The crackdown comes as India attempts to tighten tax compliance in the rapidly growing crypto sector—despite not yet having a fully defined regulatory framework for digital assets.
Related: India’s Crypto Regulations Still Evolving
CBDT Sends Over 44,000 Compliance Notices via NUDGE Campaign
As part of its “NUDGE” initiative, the CBDT launched a targeted awareness and enforcement program. Over 44,057 emails and SMS messages were dispatched to taxpayers identified as having traded or held crypto assets—yet failed to report them under the required Schedule VDA in their ITR filings.
“To create awareness among taxpayers regarding the disclosure of VDA and payment of tax, the CBDT has launched the NUDGE campaign,” said Finance Minister Chaudhary.
The messages serve as soft warnings, prompting individuals to amend their filings or prepare for legal scrutiny.
Learn More: CBDT’s NUDGE Campaign Explained
₹705 Crore Collected in Crypto Taxes; ₹630 Crore in Unreported Income Found
Between FY2022-23 and FY2023-24, the Indian government collected over ₹705 crore (approx. $80 million) in taxes from crypto gains. In parallel, raids and income tax surveys uncovered an additional ₹630 crore (~$75 million) in undisclosed income from VDAs, including cryptocurrencies and NFTs.
These developments highlight the increasing effectiveness of India’s crypto tax enforcement systems and tools.
Understanding India’s Crypto Tax Rules in 2025
India’s crypto tax regime remains one of the most stringent globally. While the legal classification of cryptocurrencies is still unclear, taxation is firmly in place, and includes:
- 30% flat tax on income from digital assets under Section 115BBH
- 1% TDS on all VDA transactions above threshold limits (per Section 194S)
- 18% GST on platform fees for trading, wallet usage, and other crypto-related services
Reference: Income Tax Guidelines on Virtual Digital Assets (VDAs)
Data Analytics Powering India’s Crypto Oversight
India’s enforcement campaign leverages tools like:
- Project Insight – a data analytics platform for cross-referencing crypto wallet activity with tax filings
- Non-Filer Monitoring System (NMS) – used to identify and act against individuals failing to file tax returns despite substantial asset activity
These systems also integrate data from Virtual Asset Service Providers (VASPs), ensuring tighter compliance tracking across the entire ecosystem.
Related: How India’s Tax Department Tracks Crypto Investors
Final Thoughts: Stricter Oversight, But No New Crypto Laws Yet
Despite the aggressive enforcement measures, India has yet to roll out a comprehensive crypto regulatory framework. The government has recently decided to maintain the current tax structure without any immediate changes.
However, this latest crackdown sends a clear signal: non-disclosure of crypto income will not be tolerated, even in the absence of broader legislation.
Key Takeaways
- Over 44,000+ crypto investors received compliance messages from India’s tax authority
- ₹705 crore in crypto taxes collected in FY23-FY24; ₹630 crore in undeclared crypto income uncovered
- Use of AI-driven tools like Project Insight improves tax surveillance
- Crypto income is taxable even though India has not legalized crypto trading
- The government continues to strengthen enforcement despite regulatory ambiguity
Frequently Asked Questions (FAQs)
Q1: Is crypto trading legal in India in 2025?
While not officially banned, crypto trading operates in a gray area. However, crypto income is fully taxable under Indian law.
Q2: What happens if I didn’t report crypto gains?
You may receive a notice under the Income Tax Act, be subject to reassessment, and possibly face penalties or seizure of assets.
Q3: What is Schedule VDA in the ITR form?
It’s a dedicated section in the Indian ITR form where you must disclose gains or holdings in virtual digital assets such as crypto or NFTs.
