India Bolsters Crypto Tax Compliance with Advanced Analytics and Training
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India is intensifying its oversight of cryptocurrency transactions, leveraging cutting-edge data analytics and forensic tools to curb tax evasion while boosting revenue from virtual digital assets (VDAs).

Surging Revenue from Crypto Taxation

In a recent Lok Sabha session, Minister of State for Finance Pankaj Chaudhary shared that the 30% flat tax on VDA gains, introduced under Section 115BBH of the Income Tax Act in 2022–23, generated ₹269.09 crore (approximately $32 million) in its first year. This surged to ₹437.43 crore in 2023–24, with 2024–25 figures pending as the tax filing deadline is ongoing.

Advanced Tools to Combat Tax Evasion

The Indian government is deploying sophisticated data analytics to track and detect tax evasion in VDA transactions. Tools like the Non-Filer Monitoring System (NMS), Project Insight, and internal Income Tax Department databases are being utilized. While real-time matching of income tax returns with Tax Deducted at Source (TDS) filings from Virtual Asset Service Providers (VASPs) is not yet operational, retrospective analyses are identifying discrepancies. Cases where TDS was deducted but income above ₹1 lakh was not reported are flagged, triggering outreach through the NUDGE initiative to encourage corrected filings.

Comprehensive Crypto Tax Framework

India’s crypto tax regime is robust:

  • A 30% tax applies to gains from VDA transfers, with only acquisition costs deductible.

  • A 1% TDS is levied on VDA transactions above specific thresholds to monitor activity.

  • International exchanges like Bybit have aligned with Indian regulations, imposing an 18% Goods and Services Tax (GST) on service fees for Indian users since July 7.

Strengthening Enforcement with Training

To enhance compliance, the government is investing in capacity-building for enforcement officers. Training programs, workshops, and webinars focus on digital forensics, blockchain analysis, legal frameworks, and handling digital evidence. Partnerships with institutions like the National Forensic Science University in Goa provide specialized courses to sharpen officers’ skills in monitoring crypto transactions.

India’s proactive measures signal a commitment to ensuring compliance while fostering a transparent digital asset ecosystem.