India’s tax authorities have stepped up their crackdown on the rapidly expanding cryptocurrency industry, issuing more than 44,000 compliance notices to individuals who failed to report income or transactions related to Virtual Digital Assets (VDAs).

The Central Board of Direct Taxes (CBDT) announced that the enforcement is part of a broader initiative to curb tax evasion and establish tighter control over one of the world’s fastest-growing crypto markets.

Advanced Data Analysis and Severe Penalties

Authorities are now using cutting-edge data analytics to match tax filings with transaction data collected from Virtual Asset Service Providers (VASPs). Any discrepancies trigger warnings and potential penalties.

As part of the NUDGE program, which encourages voluntary compliance, the government sent out 44,057 emails and SMS messages to identified users who bought or sold crypto assets but failed to declare them in tax filings. These users face steep fines—up to 200% of unpaid tax—for underreporting.

Raids, Asset Seizures, and Hidden Profits Revealed

Finance Minister Pankaj Chaudhary confirmed that targeted tax campaigns, property seizures, and investigations have been carried out under the Income Tax Act of 1961. In fiscal years 2023–2024, officials collected ₹705 million (~$80 million) in declared crypto revenue.

However, investigations uncovered at least ₹630 million (~$75 million) in undeclared gains, prompting further audits, enforcement actions, and seizures nationwide.

In a high-profile case, India’s Enforcement Directorate seized ₹42.8 million (~$4.8 million) in assets from an Indian citizen who defrauded global investors with a fake Coinbase website. The individual is currently serving a 10-year prison sentence in the U.S. for a $20 million crypto scam.

India Begins Licensing Crypto Exchanges

To better monitor the expanding market, India’s Financial Intelligence Unit (FIU) has begun granting official licenses to both domestic and international exchanges.

Major global platforms like Binance, Coinbase, KuCoin, and Bybit have been approved and are now under direct FIU oversight. This framework allows Indian authorities to track transactions more effectively and ensure tax compliance.

🧾 India’s Harsh Crypto Tax Rules Remain Unchanged

Since 2022, India has maintained one of the strictest crypto tax regimes in the world:

🔹 All profits from cryptocurrencies and NFTs are taxed at a flat 30% under Section 115BBH.

🔹 A 1% Tax Deducted at Source (TDS) is applied to all transactions above a certain threshold.

🔹 Wallet services and exchange fees are subject to an additional 18% Goods and Services Tax (GST).

Despite ongoing pushback from the industry, the government remains firm on enforcement and has even expanded its surveillance. Tools like Project Insight and the Non-Filer Monitoring System (NMS) link blockchain activity directly to taxpayer records.

⚠️ What Happens If You Don’t Report Your Crypto Activity?

Under Indian law:

🔹 Failure to report crypto income can result in a penalty of 50% of the unpaid tax.

🔹 If deliberate misreporting is proven, the fine can go up to 200%.

🔹 In extreme cases, authorities may seize assets and initiate criminal prosecution.

#IndiaCrypto , #cryptotax , #crypto , #Regulation , #Binance

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