Key facts
- India's tax authorities have identified over $104 million in unreported income from virtual digital assets.
- More than 44,000 notices have been issued to individuals regarding crypto transactions.
- The new Income Tax Act, 2025, mandates detailed transaction-level disclosures for crypto investors.
- Crypto trading profits are taxed at 30%, with a 1% tax deducted at source (TDS).
- Crypto exchanges and custodians are required to report user transaction data to tax authorities.
India's tax authorities are intensifying their crackdown on undeclared cryptocurrency income, identifying over $104 million in unreported virtual digital asset (VDA) activity. This heightened vigilance coincides with the 2026 tax filing season and the implementation of the new Income Tax Act, 2025.
The Income Tax Department has already dispatched more than 44,000 notices to individuals concerning their crypto transactions. The newly enacted legislation requires taxpayers to provide granular, transaction-level details for every trade, token swap, transfer, and disposal, moving beyond simple profit or loss reporting. This applies to activity on centralized exchanges, decentralized finance platforms, and multi-wallet usage.
Crypto exchanges, custodians, and wallet service providers are now mandated to report user-specific transaction data directly to tax authorities. This information will be used to automate reconciliation processes against individual tax returns and blockchain records. Tax professionals note that the expanded reporting requirements could present challenges for active traders across multiple platforms, increasing the risk of scrutiny for inaccuracies or incomplete histories.