Crypto traders under scrutiny: 44,000 tax notices issued for non-disclosure of gains, govt shares details
Tax authorities have uncovered Rs 888.82 crore in undisclosed income during search and seizure operations. Discrepancies between trading records and tax filings prompted the issuance of mass notices.
- Dec 10, 2025,
- Updated Dec 10, 2025 5:29 PM IST
The government informed Parliament that over 44,000 tax notices have been issued to individuals who traded cryptocurrencies but did not disclose their profits in Income Tax Returns. This figure highlights the vast volume of unreported crypto transactions, with thousands of investors trading digital assets without declaring their gains officially.
While India lacks a dedicated law regulating cryptocurrencies, the government acknowledges that crypto assets are inherently borderless and require global cooperation for effective regulation. “Crypto-assets/Virtual Digital Assets (VDAs) remain unregulated in India, and data collection on these assets is limited. Effective regulation depends on strong international collaboration to address risks, benefits, and common standards,” the government stated in response to queries about crypto regulations.
Tax authorities have uncovered Rs 888.82 crore in undisclosed income during search and seizure operations. Discrepancies between trading records and tax filings prompted the issuance of mass notices. To detect tax evasion, the Income Tax Department employs project insight, internal analytics, and data from crypto exchanges, including TDS filings, to match crypto transactions with tax returns.
The government has also brought VDAs under the Prevention of Money Laundering Act, 2002, with Virtual Asset Service Providers (VASPs) required to report suspicious transactions to the Financial Intelligence Unit (FIU-IND). The Enforcement Directorate has investigated crypto-related cases under PMLA, seizing crime proceeds worth ₹4,189.89 crore, arresting 29 individuals, and filing 22 prosecution complaints. One accused has been declared a Fugitive Economic Offender. Additionally, laws like the Prohibition of Benami Property Transactions Act, 1988, and the Black Money Act, 2015, apply to VDAs, Parliament was told.
The Finance Ministry told the Rajya Sabha that it collected Rs 511.8 crore in TDS on crypto trades in 2024–25. With TDS levied at 1% per transaction, this implies that total crypto trading volumes for the year were around Rs 51,180 crore.
Crypto taxation in India
In India, profits from selling, swapping, or using crypto assets are taxed at a flat 30% rate. Additionally, a surcharge and a 4% health and education cess may apply. The Finance Act 2022 introduced a provision in the Income Tax Act, retained in the 2025 version, that mandates a 1% Tax Deducted at Source (TDS) on any transfer of Virtual Digital Assets (VDAs) or cryptocurrencies.
Crypto taxation in India falls under Section 115BBH of the tax code, which does not offer any reduced rates, even for long-term capital gains from crypto transactions. Deductions are limited strictly to the cost of acquiring the asset, with no deductions allowed for transaction fees or other related expenses.
The 1% TDS on all VDA transfers applies to both individuals and institutions, aiming to increase transparency in crypto dealings. This rule came into effect on July 1, 2022. The Union Budget 2025 reinforces this with stricter compliance and reporting requirements as crypto adoption expands.
From the fiscal year 2025-26, crypto exchanges and other designated entities will be required to report transactions mandatorily, ensuring better tax compliance and transparency.
Crypto assets and long-term wealth planning
CoinDCX’s 2025 Annual Report reveals that Indian investors are increasingly viewing digital assets as part of their long-term wealth plans, shifting from focusing on single-asset speculation to building more diversified portfolios. The report highlights growing involvement from investors in non-metro cities and a stronger emphasis on research-based investment decisions.
CoinDCX recorded Rs 51,333 crore in trading volume for FY25, but the report focuses more on changing investor behaviour than on trading numbers. On average, Indian crypto investors now hold five different tokens, up from two or three in 2022, showing interest beyond just Bitcoin. The report notes that 43.3% of portfolio volume is dedicated to Layer-1 networks, followed by Bitcoin at 26.5% and meme tokens at 11.8%.
The government informed Parliament that over 44,000 tax notices have been issued to individuals who traded cryptocurrencies but did not disclose their profits in Income Tax Returns. This figure highlights the vast volume of unreported crypto transactions, with thousands of investors trading digital assets without declaring their gains officially.
While India lacks a dedicated law regulating cryptocurrencies, the government acknowledges that crypto assets are inherently borderless and require global cooperation for effective regulation. “Crypto-assets/Virtual Digital Assets (VDAs) remain unregulated in India, and data collection on these assets is limited. Effective regulation depends on strong international collaboration to address risks, benefits, and common standards,” the government stated in response to queries about crypto regulations.
Tax authorities have uncovered Rs 888.82 crore in undisclosed income during search and seizure operations. Discrepancies between trading records and tax filings prompted the issuance of mass notices. To detect tax evasion, the Income Tax Department employs project insight, internal analytics, and data from crypto exchanges, including TDS filings, to match crypto transactions with tax returns.
The government has also brought VDAs under the Prevention of Money Laundering Act, 2002, with Virtual Asset Service Providers (VASPs) required to report suspicious transactions to the Financial Intelligence Unit (FIU-IND). The Enforcement Directorate has investigated crypto-related cases under PMLA, seizing crime proceeds worth ₹4,189.89 crore, arresting 29 individuals, and filing 22 prosecution complaints. One accused has been declared a Fugitive Economic Offender. Additionally, laws like the Prohibition of Benami Property Transactions Act, 1988, and the Black Money Act, 2015, apply to VDAs, Parliament was told.
The Finance Ministry told the Rajya Sabha that it collected Rs 511.8 crore in TDS on crypto trades in 2024–25. With TDS levied at 1% per transaction, this implies that total crypto trading volumes for the year were around Rs 51,180 crore.
Crypto taxation in India
In India, profits from selling, swapping, or using crypto assets are taxed at a flat 30% rate. Additionally, a surcharge and a 4% health and education cess may apply. The Finance Act 2022 introduced a provision in the Income Tax Act, retained in the 2025 version, that mandates a 1% Tax Deducted at Source (TDS) on any transfer of Virtual Digital Assets (VDAs) or cryptocurrencies.
Crypto taxation in India falls under Section 115BBH of the tax code, which does not offer any reduced rates, even for long-term capital gains from crypto transactions. Deductions are limited strictly to the cost of acquiring the asset, with no deductions allowed for transaction fees or other related expenses.
The 1% TDS on all VDA transfers applies to both individuals and institutions, aiming to increase transparency in crypto dealings. This rule came into effect on July 1, 2022. The Union Budget 2025 reinforces this with stricter compliance and reporting requirements as crypto adoption expands.
From the fiscal year 2025-26, crypto exchanges and other designated entities will be required to report transactions mandatorily, ensuring better tax compliance and transparency.
Crypto assets and long-term wealth planning
CoinDCX’s 2025 Annual Report reveals that Indian investors are increasingly viewing digital assets as part of their long-term wealth plans, shifting from focusing on single-asset speculation to building more diversified portfolios. The report highlights growing involvement from investors in non-metro cities and a stronger emphasis on research-based investment decisions.
CoinDCX recorded Rs 51,333 crore in trading volume for FY25, but the report focuses more on changing investor behaviour than on trading numbers. On average, Indian crypto investors now hold five different tokens, up from two or three in 2022, showing interest beyond just Bitcoin. The report notes that 43.3% of portfolio volume is dedicated to Layer-1 networks, followed by Bitcoin at 26.5% and meme tokens at 11.8%.