In a major enforcement action, India’s Income Tax Department has sent out thousands of notices to crypto traders who failed to disclose their transactions in their tax returns. According to a recent statement from the Ministry of Finance, the Central Board of Direct Taxes (CBDT) has identified multiple cases of non-compliant crypto transactions.
India Takes Action Against Unreported Crypto Transactions
In an official statement released by India’s Finance Ministry, Minister Pankaj Chaudhary stated that the department has taken measures against crypto traders found non-compliant. These measures include reassessment notices and seizure operations under the Income Tax Act, 1961. This major development signals a stricter approach to tax compliance in India’s digital asset space.
Notably, the Central Board of Direct Taxes (CBDT) has launched a targeted awareness initiative under its NUDGE campaign. The program intends to boost voluntary compliance within crypto traders by sending 44,057 emails and messages to individuals who traded or invested in Virtual Digital Assets (VDAs) without reporting them in their ITRs. The Finance Minister stated,
To create awareness among taxpayers regarding the disclosure of VDA and payment of tax, CBDT has recently launched NUDGE…taxpayers campaign under which 44,057 emails and messages have been sent to select taxpayers who had invested and traded in the VDAs (virtual digital assets) but did not report the transactions in schedule VDA of their… (ITRs).
India is yet to establish clear crypto regulations, trailing behind major global economies like the US. However, the government previously indicated plans to reassess its approach to crypto.
Further, the Minister of State revealed that the government collected ₹705 crore (about $80 million) in taxes from Virtual Digital Asset (VDA) income between FY23 and FY24. Additionally, raids and surveys uncovered ₹630 crore ($75 million) in previously unreported income from such assets.
Crypto Taxation in India
While crypto’s legal status in India is ambiguous, income from Virtual Digital Assets (VDAs), including cryptocurrencies and NFTs, is subject to taxation. Significantly, India’s crypto tax regime includes a 30% flat tax on income from virtual digital assets (Section 115BBH) and 1% TDS on transactions exceeding specified thresholds. It also includes an 18% GST on service fees charged by crypto platforms for services like trading and wallet management.
Interestingly, this scrutiny comes on the heels of India’s recent decision to hold the crypto tax rules unchanged. As CoinGape reported, the country has opted to hold off on making immediate changes to its tax policies and cryptocurrency regulations.
In the latest development, the CBDT uses advanced tools like the Non-Filer Monitoring System (NMS) and Project Insight to cross-check tax filings with transaction data from Virtual Asset Service Providers (VASPs), ensuring compliance in the crypto industry.
Nynu V Jamal
Nynu V Jamal is a Senior Journalist at CoinGape. She boasts more than 3 years of experience in content writing, with expertise in crypto and blockchain. She has contributed to platforms like CoinEdition and CryptoTale, demonstrating her proficiency in navigating the dynamic crypto landscape.
Beyond her journalistic pursuits, Nynu is a literary enthusiast, having served as an Assistant Professor of English Language and Literature. She is a Master’s degree holder in English Literature and a UGC NET qualifier. Her academic background has enabled her to publish research papers on literature, while also nurturing her creative side as a published poet.
Her creative side extends to music, crafts, and art, which she actively explores. Her unique blend of analytical and creative skills allows her to craft engaging stories that captivate audiences. Stay updated with Nynu on LinkedIn
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