India Cracks Down on Crypto Traders as Hidden Income Revealed

India's tax department has sent over 44,000 notices to crypto traders after detecting more than ₹888 crore ($104 million) in undisclosed Virtual Digital Asset income. This crackdown comes as exchanges now report user-level transaction data directly to the government.

The old Income Tax Act of 1961 still governs investor obligations for filings covering FY 2025-26, but the new Act adds 'crypto-asset' explicitly to the VDA definition and renumbers governing sections. A flat 30% tax on VDA profits and a 1% TDS on transfers above ₹10,000 are in place, with no deductions except cost of acquisition and no cross-asset loss offsetting.

The department is actively combining Annual Information Statements, exchange TDS filings, and blockchain analytics to catch discrepancies. The system automatically flags any gap between what an investor declares and what the exchange has already reported. This infrastructure is producing results quickly, with 44,000 notices already issued.