Market News

Crypto Compliance Surge: India's Tax Authorities Crack Down on Virtual Assets

India's tax agency is intensifying its scrutiny of cryptocurrency transactions, signaling a crackdown on tax evasion in the crypto sector.

Taxpayers across the country are receiving notifications concerning unreported income from virtual digital assets.

This initiative aims to identify hidden profits and potential money laundering activities involving cryptocurrencies.

Officials from the Central Board of Direct Taxes are verifying whether taxpayers correctly reported their crypto trades on Schedule VDA of their income returns.

Discrepancies between reported incomes and TDS filings from crypto exchanges have raised alarm bells, resulting in numerous alerts being issued.

According to Section 115BBH of the Income Tax Act, gains from the transfer of virtual digital assets are subject to a flat 30% tax, without allowances for loss offsets or further deductions.

India's current NUDGE campaign focuses on encouraging compliance through data-driven insights rather than aggressive enforcement measures.

Traders engaging in minor crypto transactions now face greater risks, as inaccuracies in reporting could lead to hefty penalties.

Exchanges also bear the responsibility of accurate reporting to avoid triggering investigations into their clients.

The shifting regulatory landscape may compel traders to improve their record-keeping practices or reduce trading volumes, while potentially attracting institutional investors seeking clarity.