India Warns: Crypto Makes Tax Tracking Harder

Ben Graham · ontem às 08:30

India’s tax authorities have cautioned lawmakers that rising crypto adoption is complicating tax enforcement rather than improving transparency. This is not new: authorities are still trying to figure out how to efficiently track crypto wallets and transactions, but the nature of crypto makes this task particularly difficult. Yes, crypto is making tax collection harder and not only in India.

BREAKING: Income Tax Department flags crypto as risky, joins RBI in opposing wider use in India. pic.twitter.com/0UacbNPlF8

— Crypto India (@CryptooIndia) January 8, 2026

Crypto trading activity in India has remained restrained as tax and regulatory pressure continue to shape market behaviour. The situation reflects a broader international trend in which governments allow crypto activity but insist on stronger oversight and compliance.

The comments were made by India’s Income Tax Department during a parliamentary finance discussion, where officials outlined the structural challenges of monitoring crypto transactions. Private wallets, offshore exchanges, and decentralised finance platforms were cited as areas where traditional reporting mechanisms provide limited visibility.

India already enforces one of the most stringent crypto tax frameworks globally.

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Tax Structure That Has Already Changed Trading Behavior

Indian officials told lawmakers that crypto transfers often skip traditional banks, making them harder to trace. A private wallet works like cash in your pocket. No bank sits in the middle. That freedom excites users, but it frustrates tax collectors.

They also flagged offshore exchanges and DeFi. Indian officials said cross-border activity makes transaction trails nearly impossible to rebuild. India taxes crypto profits at a flat 30%. On top of that, every trade triggers a 1% TDS, even if you lose money. Losses do not offset gains. That structure already scares away frequent traders.

Now add enforcement. Authorities have already sent over 44,000 and uncovered more than ₹888 crore ($98.5 million) in unreported income.

This mirrors the global crypto tax crackdown already unfolding elsewhere.

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Enforcement Takes Priority as India Rejects a Blanket Crypto Ban

Despite the tougher language, India has not moved to prohibit crypto trading. Regulated platforms continue to operate, and several international exchanges, like Coinbase, have registered or returned to the market after aligning with local anti-money-laundering and reporting requirements. At the same time, authorities have taken action against offshore platforms that failed to meet compliance standards.

The Financial Intelligence Unit has expanded its oversight of crypto exchanges, reinforcing the government’s preference for regulation over restriction. This matches trends in Europe, where the tax burden already shapes trading behavior.

As of January 1, DAC8 is officially live in the EU
This marks the end of real crypto privacy in Europe

All exchanges are now required to report user data to tax authorities. This includes your name, tax ID, and a full record of your transactions. The process is automatic, not… pic.twitter.com/7RkLgHCCc3

— StacyOnChain (@anastassiua) January 8, 2026

India has 100 to 150 million crypto users. That adoption did not vanish under pressure. India remains one of the world’s largest crypto markets by user count. Activity has increasingly shifted toward longer holding periods and platforms that meet regulatory expectations.

As enforcement tools become more sophisticated, further data sharing agreements and targeted audits appear more likely than changes to the existing tax structure. For India’s crypto market, compliance is emerging as the defining factor shaping its next phase.

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