India Cracks Down: Thousands of Crypto Traders Hit With Tax Evasion Notices

Indian authorities just dropped the hammer—issuing thousands of compliance notices to crypto traders accused of dodging taxes. No more flying under the radar.

Subheading: The Taxman Cometh for Crypto

Forget 'decentralization' as a tax haven—India's revenue department is treating crypto like any other asset class. And they’re armed with transaction trails.

Subheading: A Warning Shot to the Industry

This isn’t a random audit. It’s a systemic sweep targeting unreported gains. Message received? Compliance isn’t optional—even in the ‘wild west’ of finance.

Closing thought: Traders scrambling to amend filings now prove crypto’s golden rule—everyone loves decentralization until the tax office gets involved.

India Tougher Stance on Crypto Taxation

The crackdown comes as the Indian government continues to enforce its tax laws related to VDAs. Since 2022, income from VIRTUAL digital assets, including cryptocurrencies and NFTs, is subject to a flat 30% tax.

The government has also imposed a 1% Tax Deducted at Source (TDS) on transactions above a certain threshold, as well as an 18% GST on crypto services.

While the Indian government has yet to establish clear regulatory guidelines for cryptocurrencies, it has made efforts to tighten compliance. The CBDT has employed advanced tools, such as the Non-Filer Monitoring System (NMS) and Project Insight, to monitor and cross-check VDA transactions against taxpayers’ income tax returns. These systems help identify discrepancies and ensure that crypto earnings are accurately reported and taxed.

India Focus on Raising Awareness Among Crypto Traders

As part of the ongoing crackdown, the CBDT has sent emails and messages to taxpayers who have failed to report their crypto earnings. According to Pankaj Chaudhary, India’s Minister of State for Finance, the goal of the NUDGE campaign is not only to ensure compliance but also to raise awareness.

“To create awareness among taxpayers regarding the disclosure of VDA and payment of tax, CBDT has recently launched the NUDGE campaign,” Chaudhary explained.

The department aims to make taxpayers more aware of the importance of reporting VDA income in the correct section of their income tax returns. Additionally, taxpayers who do not comply with the tax regulations may face more severe measures, including reassessments, surveys, or even search and seizure operations under the Income Tax Act of 1961.

Unreported Crypto Income Identified

In a recent statement, the Minister of State for Finance revealed that the total tax collected from crypto transactions for the financial years 2022-23 and 2023-24 reached ₹705 crore (around $80 million). This figure is a result of taxpayers voluntarily declaring their crypto earnings.

Additionally, authorities have uncovered ₹630 crore (about $75 million) in previously undisclosed income through search and survey operations.

The crackdown not only highlights the government’s desire to improve tax compliance in the crypto sector but also emphasizes the need for traders and investors to understand the importance of proper reporting. With the use of advanced monitoring systems, the tax department aims to identify cases of tax evasion and ensure that crypto-related income is accurately reported in the country’s tax system.