The Central Board of Direct Taxes has begun sending notices to thousands of individuals in India. The probe targets anyone who traded cryptocurrency on unregistered platforms or through peer‑to‑peer wallets.
Sumit Gupta, CEO and co‑founder of CoinDCX, warned on social media that failing to report such trades in income tax returns can bring heavy penalties.
What Traders Overlooked
According to the CBDT, many investors did not declare their virtual digital asset trades when filing taxes. A flat rate of 30% tax applies to all such income.
Yet some traders claimed cost indexation or failed to pay the required amount. Others did not report crypto airdrops or rewards. These oversights go against the Income Tax Act and now face official scrutiny.
Consequences of Non‑Compliance
Traders who ignore the notices risk penalties up to 70% on undisclosed crypto gains. On top of that, interest accrues on unpaid taxes.
In serious cases, the authorities may pursue criminal charges. The government’s “nudge” policy gives a chance to correct mistakes before tougher actions begin. However, once the window closes, enforcement could escalate.
Data on Offshore Trading
Industry research suggests that between December 2023 and October 2024, Indians traded over 2.63 trillion rupees worth of crypto on offshore platforms.
These services often do not collect tax at source or provide transaction reports. Even though they operate outside India’s tax rules, Indian users remain liable to file and pay tax on their gains.
Also Read: India’s Budget 2025: No Change On Crypto Taxes, 30% Tax On Capital Gains Remains
Exchange Response and Support
At CoinDCX, compliance is a priority. The exchange deducts 1% as tax at source and issues Form 16 to its users. It also provides detailed transaction reports and publishes guides to help people file accurate returns.
Sumit Gupta stressed that responsible adoption of crypto demands following the law and paying any due taxes.
Binance Reverification Effort
In a related compliance step, Binance advised its Indian customers to re‑verify their accounts. Both new and existing users must update their details to meet anti-money laundering standards.
The firm has registered with India’s Financial Intelligence Unit and now needs to collect Permanent Account Number information from clients.
Emails outlining the process have been sent to all account holders, with step-by-step instructions on how to complete the update.
Steps to Stay Compliant
Traders who receive a notice or suspect they did not report transactions should revise their income tax returns without delay.
All virtual asset trades, including peer‑to‑peer deals and airdrops, must be declared. The required tax should be paid along with any interest. Taking these steps now can prevent larger fines or legal action later.
Industry Outlook
As India’s crypto market grows, regulators are tightening the rules. Exchanges must hold proper licenses and report user activity to tax authorities.
Investors using global or unregistered platforms face a greater risk of non‑compliance. By contrast, local exchanges that follow tax norms offer a safer path for those new to digital assets.
The CBDT’s investigation sends a clear signal that crypto traders must treat their digital gains as taxable income. With notices already in circulation, there is no room for delay.
Also Read: Indian Budget 2025: Crypto Industry Eyes Clarity on Taxation and Regulatory Framework