India sends over 44,000 tax assessments for crypto income

India is cracking down on crypto tax evasion more aggressively this year than ever before. The Indian tax authority has sent out more than 44,000 assessments for so-called virtual digital assets (VDAs) and has already identified over Rs 888 crore ($104 million) in undeclared crypto income. That is according to The Economic Times.

New rules force exchanges to be more transparent

From the 2026 tax year, crypto exchanges, custodians and wallet providers will be required to submit transaction data at user level directly to the Indian tax authority. This data will be automatically cross-checked against investors’ filed tax returns. If the profit declared in the VDA section of the return differs from what an exchange has reported, the system will flag it as a discrepancy.

The rules on crypto taxation themselves have not changed: profits on digital assets are taxed at 30%, while certain transactions are subject to a 1% withholding tax (TDS). Investors are required to list every trade, swap and sale separately in their return. It is no longer sufficient to declare only the net result.

Tax authority deploys blockchain analysis

The tax authority is not limiting itself to exchange data. It actively uses Annual Information Statements, TDS records from exchanges and blockchain analysis to trace income. The gap between what investors declare and what the system sees is therefore becoming increasingly narrow.

This approach shows that governments worldwide are becoming increasingly capable of tracking crypto investments. Anyone who fails to correctly report their crypto gains runs a growing risk of a tax assessment or penalty. For anyone actively trading through a crypto exchange, it is therefore wise to keep careful records of all transactions.