India’s crypto tax checks have become stricter after the Income Tax Department issued more than 44,000 notices linked to virtual digital asset filings.
Summary
- India issued over 44,000 VDA notices after matching crypto filings with exchange-reported transaction data.
- Tax officials found Rs 888 crore in hidden VDA income as filing checks became stricter.
- Investors must report each trade, swap, and disposal under Schedule VDA for FY 2025-26.
The department found more than Rs 888 crore, or about $104 million, in undisclosed VDA income, according to The Economic Times. The figures show how tax officials are using exchange data, TDS filings, and investor returns to track mismatches.
India keeps 30% VDA tax in place
India’s core crypto tax rules remain unchanged for FY 2025-26. Gains from virtual digital assets are taxed at a flat 30%, while eligible transfers face a 1% tax deducted at source.
The Income Tax Department says VDA income is taxed without deductions, except the cost of acquisition. Losses from one crypto asset also cannot be used to reduce gains from another asset.
Schedule VDA becomes a key filing test
Investors must use ITR-2 when reporting crypto as capital gains. Those treating crypto trading as business income must use ITR-3. Both forms include Schedule VDA for detailed transaction reporting.
Schedule VDA does not allow investors to report only net gains. Each trade, swap, disposal, and taxable transfer must be entered separately. A crypto-to-crypto swap can also create a taxable event.
Exchange data raises mismatch risks
Budget 2026 added tighter reporting duties for exchanges, custodians, and wallet providers. These entities must send user-level transaction data to the Income Tax Department.
That data allows the department to compare investor filings with exchange records. A mismatch between Schedule VDA, Form 26AS, TDS records, and exchange reports can trigger a notice.
Offshore holdings face closer review
The compliance net may widen further from 2027. India is aligning with the OECD Crypto-Asset Reporting Framework, which supports cross-border sharing of crypto account data.
As previously reported by crypto.news, India has already moved toward tighter digital-asset oversight. Recent rules require platforms to submit user-level transaction data, while overseas crypto holdings may become easier for authorities to trace.
The latest notices show that crypto tax filing in India has moved beyond self-reporting alone. Investors who used multiple exchanges, DeFi platforms, or offshore accounts now face a higher burden to keep full records.
The filing risk is not limited to large traders. Missing staking income, airdrops, wallet transfers, or TDS reconciliation can create questions during review. The department’s message is clear: crypto investors must file accurately before enforcement reaches them.
