Indian taxpayers paid as much as Rs 705 crore (approx. $80M) in taxes on virtual digital asset (VDA) gains for the financial years 2022-23 and 2023-24, Parliament was told on Tuesday.
The funds came after the government brought in a 30 % levy on profits from crypto transfers under section 115BBH of the Income Tax Act, 1961. At the same time, tax officials uncovered another Rs 630 crore (approx. $71M) of undeclared crypto income during search and survey drives.
Tax Collection on Virtual Digital Assets
The special tax on income from VDA transfers began in April 2022. In a Rajya Sabha reply, MoS Finance Pankaj Chaudhary said “Taxpayers reported and paid a total of Rs 705 crore (approx. $80M) for the first two years of the regime.”
The levy is fixed at 30%, with no deductions allowed, and this clear rule aims to bring more transparency to a booming market that has long worried regulators.
Alongside these filings, the Income Tax Department detected Rs 630 crore (approx. $71M) of undisclosed VDA gains in its enforcement actions.
Officers conducted surveys across the entire country. These operations focused on individuals and entities whose crypto activity suggested higher profits than declared.
In many cases, tax officers followed transaction trails on public blockchains to spot gaps between trading records and ITR filings.
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NUDGE Campaign Prompts Reporting
To encourage honest reporting, the Central Board of Direct Taxes has rolled out the NUDGE campaign. NUDGE stands for Non-Intrusive Usage of Data to Guide and Enable.
Under this drive, the department sent 44,057 emails and SMS alerts to investors who traded in digital assets but did not list them under Schedule VDA of their returns. Officials hope these gentle reminders will push taxpayers to correct past omissions without formal notices.
Despite the NUDGE messages, some traders failed to heed the warnings. The I-T Department has issued formal notices to all 44,057 non-compliant investors this season.
These notices demand that recipients explain why they left crypto transactions out of their tax returns. Traders must now either update past returns or face penalties and interest on unpaid dues.
Growing Regulatory Scrutiny
The decision comes as India intensifies the push to regulate cryptocurrencies. Regulators and lawmakers are concerned that unregulated tokens might be used for money laundering or capital control evasions.
Increasing demands for exchanges like WazirX to refund user money following security issues have created a sense of urgency for the debate. The Finance Ministry is currently developing a framework to cover trading, custody and settlement of digital assets.
Some sector leaders accept that more transparent rules and improved compliance will serve to mature the market. They believe that an open tax system can bring in more institutional investors.
However, they also caution that overly heavy-handed actions risk driving innovation offshores. Crypto companies now look for advice on how to bring their businesses into line with India’s tax regime and developing regulatory norms.