India's cryptocurrency tax regime has entered a new enforcement phase. The Income Tax Department sent out more than 44,000 148A notices targeting individuals who traded cryptocurrencies during the 2021-22 fiscal year. These are not final tax bills but show-cause notices demanding an explanation for unreported income.
AI Tools Uncover ₹889 Crore in Unreported Trades
Using advanced AI engines, the tax department cross-referenced PAN card data, bank accounts, and exchange records. The result: approximately ₹889 crore in suspected unreported digital asset transactions. Some traders reported seeing inflated income figures on their notices because the system occasionally calculated based on total trading volume rather than net profit. This makes it critical for users to maintain detailed records and consult a tax professional.
From April 2026: ₹200 Daily Penalty for Non-Compliant Exchanges
Starting April 1, 2026, all crypto exchanges registered in India must report every single trade to the tax office. Failure to file will incur a daily penalty of ₹200, while submitting incorrect data can attract a fine of up to ₹50,000. This shifts the compliance burden from individual traders to the exchanges themselves.
Existing Tax Structure Unchanged: 30% Flat Tax and 1% TDS
The 2026 budget left the core tax rules untouched. A 30% flat tax applies on all crypto profits, with no allowance for loss offsetting. A 1% tax deducted at source (TDS) is levied on every trade, and Goods and Services Tax (GST) remains applicable on platform fees.
Global Reach: CARF Joins in April 2027
For those relying on foreign exchanges to stay under the radar, the window is closing. In April 2027, Indian regulators will adopt the Crypto-Asset Reporting Framework (CARF), a global automatic data-sharing agreement. This will allow India to access information on offshore wallets and international trades linked to its residents.
With over 119 million users, India remains one of the world's largest crypto markets. To stay compliant, users should verify their Annual Information Statement (AIS) against exchange records, file any missing returns from prior years, preserve all buy/sell receipts, and seek professional advice before responding to any tax notice.