Key facts
- Less than 25% of Indian crypto traders reported transactions for the year ending March 2023.
- India is estimated to have 39 million crypto traders holding over $2.1 billion in assets.
- Offshore exchanges, private wallets, and P2P trades are making crypto activity harder to track.
- India ranks first in Chainalysis' 2025 Global Crypto Adoption Index.
- The Reserve Bank of India advised insulating financial institutions from cryptocurrencies.
India's tax authorities have identified significant underreporting of cryptocurrency transactions, with fewer than a quarter of individuals engaging in crypto activity reporting these trades on their tax returns for the year ending March 2023. Government documents suggest that approximately 39 million crypto traders in India hold over $2.1 billion in digital assets. This situation complicates tax enforcement efforts, particularly with the prevalence of offshore exchanges, private wallets, and peer-to-peer trades, making it harder to track activity and recover potential tax revenue. The findings elevate tax enforcement as a critical issue in India's ongoing digital asset policy discussions, moving beyond the central bank's previous focus on financial stability. India has been recognized as a leader in crypto adoption, topping Chainalysis' 2025 Global Crypto Adoption Index. This report follows recent recommendations from the Reserve Bank of India (RBI) to insulate traditional financial institutions from cryptocurrencies and privately issued stablecoins, with prohibition noted as a policy option. Globally, tax authorities face similar challenges; Israel's voluntary disclosure program for crypto profits, which aimed to collect between 2 to 3 billion Israeli shekels (approximately $650 million to $986 million), reportedly fell far short of its targets, collecting only 40.9 million shekels in estimated tax due from 289 disclosure requests. Experts suggest that the lack of an anonymous disclosure option may have deterred participation.