ChainCatcher reported that crypto asset investors in India are facing stricter filing and compliance requirements during the 2026 tax season as tax enforcement intensifies. Incorrect reporting can lead to penalties and scrutiny. Under the current rules, gains from crypto assets remain subject to a uniform 30% capital gains tax, while transactions above a certain threshold are subject to a 1% tax deducted at source, or TDS. Investors are also not allowed to offset losses across different crypto assets.
Core crypto tax rules remain largely unchanged
The new Income Tax Act (2025) took effect on April 1, 2026, but the core tax framework for crypto assets has remained largely unchanged, according to the report. For investors, compliance is not limited to calculating final gains. They must also present detailed information on virtual digital asset, or VDA, activity in the appropriate tax return format.
At the filing level, investors are required to use ITR-2 or ITR-3 and complete the dedicated Schedule VDA section. The reporting obligation applies on a transaction-by-transaction basis. Trading, swaps, transfers, and settlements must all be recorded individually, rather than being reduced to a single profit summary. This makes full-year record management a central part of crypto tax compliance.
Authorities expand data matching through platforms and wallets
The report emphasized that the regulatory focus has been upgraded significantly. India’s tax department will obtain user-level transaction data directly from trading platforms, custodians, and wallet service providers, then compare that information automatically against taxpayers’ filings. Any inconsistency will be flagged by the system and moved into a review process.
Data cited in the report shows that Indian tax authorities have already issued more than 44,000 notices and identified around 88.8 billion rupees, or approximately $930 million, in unreported virtual asset income. The tax department is also combining on-chain analytics tools with international data-sharing mechanisms to improve tracing capabilities.
From 2027, India will connect with the OECD crypto-asset reporting framework, enabling automatic exchange of cross-border transaction data. Holdings on overseas exchanges will also gradually enter the regulatory field of view. Common mistakes highlighted in the report include using the wrong filing form, omitting airdrop and staking income, and failing to correctly match 1% TDS records. The report said crypto tax compliance is shifting from after-the-fact corrections toward real-time traceability, requiring investors to strengthen record management throughout the year.