India Targets Crypto Tax Evasion Through AI and Data Sharing

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India’s tax department is going deeper into crypto enforcement. The Central Board of Direct Taxes (CBDT) has confirmed it’s using artificial intelligence and tapping into international data-sharing networks to spot crypto trades that haven’t been reported. India’s crypto tax rules are now backed by global data-sharing networks, making it harder to hide assets overseas.

AI Joins the Hunt

According to CBDT chairman Ravi Agrawal, the department now runs over 6.5 billion transaction records through AI systems each year. These tools are designed to cross-check what people file against what’s actually happening on crypto exchanges. The goal is simple: flag the differences and catch people leaving things out.

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Agrawal made it clear that these tools are only used during formal investigations. They’re not scanning everything indiscriminately. Searches, raids, and surveys are the specific situations where these audits come into play.

Discrepancies Lead to Instant Notices

One big focus is on TDS data. India’s tax law requires exchanges to deduct one percent from every crypto transaction. The department then compares this with individual tax returns. If there’s a mismatch of over ₹100,000, that person gets an automated notice.

Since the tax framework was introduced in 2022, the government has pulled in about ₹7,000 crore from crypto activity. That includes both the 30 percent tax on profits and the 1 percent deducted per trade.

India Taps Global Crypto Reporting

India is part of an international agreement known as CARF, short for Crypto-Asset Reporting Framework. This allows governments to swap data automatically when crypto platforms have users in multiple countries. For India, it’s a way to close the gap on offshore wallets and hidden trading activity.

The CBDT sees this as a long-overdue upgrade. With many investors moving funds across borders, this kind of cooperation helps bring some transparency to transactions that were previously out of reach.

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Officials Say Privacy is Still Respected

Authorities stressed that the government isn’t grabbing wallet-level data without cause. That kind of access only happens during official tax raids. The idea is to catch evaders without prying into everyone’s accounts unnecessarily.

Some tax professionals say this is a smart way to balance enforcement with fairness. People want to see crypto treated seriously, but they also don’t want blanket surveillance on everyone who dabbles in digital assets.

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Collection Numbers Are Already Piling Up

In its first full year, the crypto tax regime brought in nearly ₹2,700 crore. The following year, it jumped to over ₹4,300 crore. Together, the total now sits at about ₹7,000 crore. On top of that, unrelated investigations using similar tools have led to corrections worth over ₹11,000 crore.

Officials believe these early results prove the tech is working. They’re continuing to roll out new tools that can process even larger datasets more efficiently.

A Bigger Overhaul Is Coming

A new income tax code is on the horizon, with a planned rollout by April 2026. Ahead of that, the CBDT is doubling down on both domestic enforcement and international collaboration. More countries are expected to join CARF, which means more cross-border data and fewer places to hide.

Crypto traders in India are likely to see tighter scrutiny going forward. The rules are already in place. Now the infrastructure is catching up.

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Key Takeaways

• India is using AI tools and global data-sharing networks to catch undeclared crypto trades and enforce tax rules.
• The tax department scans over 6.5 billion records and issues notices when exchange data doesn’t match filed returns.
• Since 2022, India has collected ₹7,000 crore through a 1% TDS on crypto trades and a 30% tax on profits.
• India is part of CARF, a global agreement that tracks cross-border crypto activity and uncovers offshore wallets.
• A new tax code is due by 2026, with stricter enforcement and deeper international collaboration already in progress.

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