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India’s Income Tax Department has escalated its fight against cryptocurrency tax evasion, sending over 44,000 notices to investors for failing to report virtual digital asset (VDA) transactions, as reported on August 7, 2025. Using AI-driven tools like Project Insight and the Non-Filer Monitoring System, authorities uncovered ₹630 crore ($75 million) in undisclosed crypto income for 2022-24, alongside ₹705 crore ($85 million) voluntarily declared, per Cryptopolitan.
The crackdown targets non-compliant traders under India’s stringent 2022 tax regime, which imposes a 30% capital gains tax on crypto profits and a 1% Tax Deducted at Source (TDS) on transactions above ₹10,000. The Central Board of Direct Taxes (CBDT) launched the NUDGE campaign, sending 44,057 emails and texts to urge compliance, with penalties for underreporting reaching up to 200% of taxes owed, according to CoinGecko.
India’s crypto market, with nearly 100 million users and 5.1% of global Bitcoin holdings, faces intense scrutiny as the government balances revenue collection with innovation. The Financial Intelligence Unit (FIU) now oversees exchanges like Binance and Coinbase, enhancing transaction tracking. However, the 30% tax and 1% TDS have driven some traders to offshore platforms, reducing domestic trading volumes, as noted by CoinDCX’s CEO.
The proposed India COINS Act 2025 offers hope, suggesting tax incentives and a new regulator, CARA, to foster clarity. For now, non-compliance risks severe fines, signaling the end of unchecked crypto gains in India.
