- India’s tax department has issued over 44,000 notices to traders who failed to report VDAs.
- CBDT has introduced a campaign to enhance the reporting of crypto income in the nation.
- Search and seizure operations uncovered ₹630 crore of unreported revenue associated with crypto wallets.
India’s Income Tax Department has initiated enforcement measures against crypto traders who failed to report their virtual digital asset (VDA) transactions. Over 44,000 notices have been sent to individuals suspected of not reporting crypto transactions in their income tax returns (ITRs).
According to a statement issued by the Ministry of Finance, the Central Board of Direct Taxes (CBDT) has reported several cases of tax default. These include transactions involving cryptocurrencies and non-fungible tokens (NFTs), which fall under the category of VDAs.
Minister of State for Finance Pankaj Chaudhary confirmed that notices were issued under the provisions of the Income Tax Act, 1961. These actions include reassessments and seizure operations in several cases where income from crypto trades was not reported.
CBDT Launches Awareness Campaign for Crypto Compliance
To increase voluntary compliance, the CBDT has introduced a targeted campaign known as the NUDGE initiative. This program aims to encourage crypto traders to correctly report their VDA income in tax filings.
“To create awareness among taxpayers regarding the disclosure of VDA and payment of tax, CBDT has recently launched the NUDGE campaign,” said Chaudhary. As part of this campaign, 44,057 emails and messages have been sent to individuals flagged for VDA activity but who failed to report those transactions in their ITRs.
The department requests that such individuals review and amend their filings as necessary. Non-compliance can lead to additional measures, including evaluations or search activities.
Undisclosed Income Worth Rs 630 Crore Discovered
The Finance Ministry also revealed that search and seizure operations have led to the declaration of Rs 630 crore (about $75 million) of undeclared income on digital assets. These assets were detected through blockchain analysis, the tracking of suspicious wallets, and digital forensics.
Investigations were made on individuals and businesses suspected of concealing or underreporting their crypto earnings. These operations were aided by tools such as the Non-Filer Monitoring System (NMS) and Project Insight, which compare tax filings with crypto exchange and other virtual asset service providers’ data.
Tax Revenue From Crypto Reaches Rs 705 Crore
During the financial years 2022–23 and 2023–24, the government collected Rs 705 crore (approximately $80 million) in taxes from VDA transactions. This amount came from individuals who voluntarily disclosed their earnings from crypto activities.
The 30% flat tax on VDA profits and a 1% Tax Deducted at Source (TDS) on all transactions above given limits have been maintained. Moreover, service fees on crypto platforms are liable to an 18% Goods and Services Tax (GST).
India’s Crypto Tax Structure Remains Unchanged
The Indian government is yet to change its crypto taxation despite the debate on potential modifications. The flat-rate tax structure introduced in 2022 continues to govern earnings from digital assets.
At present, the legal status of cryptocurrencies in India is not clearly defined. Nevertheless, the government still relies on the available tax and financial regulations to regulate the operations of VDAs.
The Finance Ministry clarified that the aim is not to prohibit the use of crypto but rather to provide proper reporting and compliance. Non-compliance can, however, result in penalties or legal action.
Traders who want to optimize their strategies can also benefit from understanding the best time to trade crypto to reduce impulsive trading and ensure better reporting.
