India Cryptocurrency Market Exposed: Tax Gaps Found Amid Growing Adoption

India's tax authorities have discovered a significant gap in crypto tax reporting. According to government documents, only around 25% of approximately 645,000 people who traded cryptocurrency during the year ending March 2023 reported their transactions on tax returns.

The findings suggest that India may be missing out on substantial tax revenue from its growing crypto market. Officials estimate that about 39 million Indians held more than $2.1 billion in digital assets at the end of May, with a significant portion being held in offshore exchanges and private wallets.

The lack of transparency in crypto transactions has raised concerns among regulators, who are reviewing India's cryptocurrency policy. The Reserve Bank of India recently recommended keeping banks and financial institutions insulated from cryptocurrencies and privately issued stablecoins.