India finds fewer than 25% reporting

India’s tax department has put a hard number on one of the country’s crypto enforcement problems: most taxable trading activity it reviewed did not show up in tax returns. Government documents reviewed by Reuters showed that fewer than a quarter of 645,000 people who made crypto transactions in the year ended March 2023 reported those trades on their returns. Reuters also reported that officials estimate India had about 39 million crypto investors holding more than $2.1 billion in digital assets at the end of May. ### Why is this finding getting attention now? July 8 is when Reuters reported the figures from government documents, and the timing matters because India is already tightening its broader crypto stance. In the same set of documents, the Reserve Bank of India said a policy “leaning towards prohibition” remained an option and urged lawmakers to keep banks and financial institutions insulated from crypto assets and privately issued stablecoins. (cointelegraph.com) July 3 was also the date of the RBI recommendations cited in those reports. That means the tax-compliance issue is surfacing alongside a renewed policy push from the central bank, not in isolation. ### What exactly did the tax department find? The 645,000 figure refers to people who carried out cryptocurrency transactions during the financial year ending in March 2023, according to the Reuters-cited documents. (bfsi.economictimes.indiatimes.com) Fewer than 25% of them reported those transactions on their income tax returns, pointing to a wide gap between observed trading activity and reported taxable activity. (grafa.com) The same documents, as described by Reuters and follow-on reports, said offshore exchanges, private wallets and rupee-denominated peer-to-peer trading made activity harder to monitor. That language is important because it shows the department is not only counting missing disclosures; it is also identifying the channels that make enforcement harder. (cointelegraph.com) ### Why would crypto trades be missed in tax filings? India already taxes virtual digital asset income at a flat 30%, plus surcharge and cess, and it generally does not allow loss set-offs against other income, according to reporting on the tax department’s enforcement campaign. The department has also been matching filed returns against tax-deducted-at-source, or TDS, data submitted by crypto exchanges. (cointelegraph.com) June 13, 2025, offers a clue to the enforcement pattern. The Economic Times, citing official sources and Reuters, reported that the Income Tax Department had emailed thousands of people who undertook crypto transactions but failed to reflect that income in returns, as part of its NUDGE campaign. The report said returns were being verified against TDS filings from exchanges and that some cases could face further scrutiny. (economictimes.indiatimes.com) Foreign and decentralized venues create another gap. KoinX, summarizing Indian tax rules, said Indian exchanges such as CoinDCX and WazirX automatically handle TDS deduction and issue Form 16A, while foreign exchanges and decentralized platforms generally do not, leaving compliance obligations with the user. ### Does this mean India is moving straight to a crypto ban? (economictimes.indiatimes.com) The Reserve Bank of India has said prohibition remains a recognized policy option, but Reuters did not report a new ban decision. What the documents show is that the central bank is still pressing for tougher containment, while the tax department is flagging underreporting and tracing problems. (koinx.com) India remains one of the world’s largest retail crypto markets by user count. Chainalysis ranked India first in its 2025 Global Crypto Adoption Index, according to the Reuters-cited reports, even as domestic policy remains unsettled. ### What should traders and exchanges watch next? April 2027 is a concrete date in the compliance pipeline. (bfsi.economictimes.indiatimes.com) KoinX said the Crypto-Asset Reporting Framework, or CARF, is due to take effect then, with foreign exchanges expected to automatically share Indian users’ transaction data with the Central Board of Direct Taxes. For now, the next step is more immediate: India’s tax department is already comparing exchange-reported data with filed returns, and Reuters-cited documents say offshore exchanges, private wallets and peer-to-peer trades remain the main blind spots under review. (cointelegraph.com) (economictimes.indiatimes.com) (koinx.com)