New Delhi: India plans to further tighten its regulation of cryptocurrency traction and may mandate third-party reporting from April 1, two people familiar with the development said.
It has already brought more than 4,500 suspected cases related to Virtual Digital Assets (VDAs) under investigation, he said on condition of anonymity.
Citing a presentation given by the Central Board of Direct Taxes (CBDT) to the Standing Committee on Finance, one of them said, “Through its e-verification process, the Income Tax Department has found data mismatch in over 4,500 cases involving VDA transactions and is investigating the discrepancies.”
The Finance Ministry did not respond to an emailed query. CBDT is a branch of the Revenue Department of the Finance Ministry and controls the activities of the Income Tax Department.
Although VDAs, including cryptocurrencies, are anonymous and borderless, the Income Tax Department still tracks all transactions involving domestically based exchanges through their income tax returns (ITRs), which are required to disclose transactions related to VDAs. Assessees will have to disclose all such acquisitions and transfers of VDAs.
To ensure that third parties like banks and crypto-exchanges mandatorily inform the government about all VDA transactions, the government has already inserted a new provision – 285BAA – in the Income Tax Act. The first person said that the CBDT is making rules which will be notified soon and the provision can be implemented from April 1, 2026.
Although VDAs including cryptocurrencies are unregulated in India, they are subject to both direct taxes (30% tax on income) and indirect taxes (GST).
Presenting the Budget on February 1, 2022, Union Finance Minister Nirmala Sitharaman said: “There has been an unprecedented growth in transactions in virtual digital assets. The volume and frequency of these transactions has made it imperative to provide a specific tax regime.”
Accordingly, it imposed a 30% tax on the income from transfer of any VDA and made TDS mandatory to “capture” the transaction details.
While domestic virtual asset service providers (VASPs) are largely complying with TDS provisions, the second person said foreign entities with Indian clients are under scrutiny for non-compliance. As of November 2025, the total number of VASPs registered with the Financial Intelligence Unit (FIU-IND) was 47.
Government has taken action against around 18 cryptocurrency exchanges for Goods and Services Tax (GST) evasion 824 crore, he said. Additionally, the CBDT’s “NUDGE” campaign (to guide and enable non-intrusive use of data) sent over 44,000 communications to taxpayers who either invested in VDAs, or traded without reporting the same in their ITRs, he said.
Even though VDAs including cryptocurrencies are not regulated in India, the Prevention of Money Laundering Act (PMLA) empowers FIU-IND to register VASPs to prevent money laundering and terror financing. Both domestic and offshore platforms serving users located in India are required to register with FIU-IND.
The central agency under the Finance Ministry was set up in November 2004 for receiving, processing, analyzing and disseminating information related to suspicious financial transactions.
