Income tax collected from cryptocurrencies or Virtual Digital Asset (VDA) transactions was recorded at Rs 437.43 crore in FY24. This is a significant jump from Rs 269.09 crore collected in FY23, the first year the VDA tax was introduced under Section 115BBH of the Income Tax Act. Data for FY25 is not yet available as the deadline for filing income tax returns is still pending.
Flat 30% tax on crypto profits introduced in April 2022
India currently doesn’t have any specific legislation to regulate cryptocurrencies, the government began taxing profits from Virtual Digital Assets (VDAs) at a flat 30 per cent from April 2022. Importantly, losses from VDA transactions cannot be set off against other income or carried forward. Additionally, a 1 per cent Tax Deducted at Source (TDS) on crypto transactions was implemented from July 2022.
No estimate yet for revenue loss due to under-reporting
MoS Finance Pankaj Chaudhary while responding to a question in the Lok Sabha said that the government has not yet made any estimates regarding potential revenue losses from under-reporting or misreporting of crypto income.
Government uses data analytics to track crypto tax compliance
To improve oversight, the government is actively using data analytics, including the Non-Filer Monitoring System (NMS), Project Insight, and internal databases. These tools help compare declared income with actual transactions reported by taxpayers.
“The Income Tax Department correlates available information on VDA transactions with the income tax returns filed by taxpayers,” the minister said in a written response to a question in the Lok Sabha on the first day of the Monsoon Session of Parliament.
Taxpayers alerted over VDA discrepancies exceeding Rs 1 lakh
Although there is no real-time matching system in place between returns filed by crypto platforms and individual taxpayers, the department is analysing discrepancies.
The Central Board of Direct Taxes (CBDT) has launched the NUDGE (Non-Intrusive use of Data to Guide and Enable) campaign. Under this initiative, the department sends alerts to taxpayers who fail to report VDA transactions despite tax being deducted at source by Virtual Asset Service Providers (VASPs).
These alerts were issued in cases where the mismatch was more than Rs 1 lakh.
Income Tax Department conducts nationwide crypto training programmes
To strengthen enforcement, the government is training tax officials in digital forensics and blockchain analysis. Various capacity-building programmes, including Chintan Shivirs and workshops, are being conducted by the Income Tax Department across the country.
Short-term training courses in partnership with the National Forensic Science University (NFSU), Goa, are also helping officers trace crypto transactions effectively.