Crypto Traders Under Scrutiny: 44,000 Tax Notices Issued for Undisclosed Gains
The government has issued over 44,000 tax notices to individuals who traded cryptocurrencies but failed to disclose profits in their income tax returns, according to data presented in Parliament. Using Project Insight, TDS filings, and analytics sourced from crypto exchanges, authorities identified widespread inconsistencies between trading activity and reported income. During search operations, tax officials uncovered ₹888.82 crore in undisclosed income, highlighting the scale of unreported digital asset gains.
Crypto earnings in India are taxed at a flat 30%, with an additional 1% TDS on every transaction involving Virtual Digital Assets (VDAs). The Finance Ministry revealed that it collected ₹511.8 crore in TDS on crypto trades in FY 2024–25, implying a trading volume of around ₹51,180 crore during the period. Despite lacking a dedicated regulatory framework for cryptocurrencies, the government has placed VDAs under the Prevention of Money Laundering Act (PMLA) to improve transparency and mitigate financial risks.
Enforcement agencies are now tightening scrutiny of crypto-linked financial crimes. The Enforcement Directorate has seized ₹4,189.89 crore worth of proceeds, arrested 29 individuals, and filed 22 prosecution complaints under anti-money laundering laws. With rising digital asset adoption across non-metro regions and a shift toward long-term crypto investing, authorities are preparing stricter compliance norms from FY 2025–26, requiring exchanges and service providers to mandatorily report transactions for better monitoring and tax accountability.
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