India issues over 44,000 crypto VDA tax notices, finds $104M in hidden income
India’s crypto tax audit has been complicated after the Income Tax Department issued more than 44,000 notices linked to the filing of virtual digital assets.
Summary
- India has issued more than 44,000 VDA notices after matching crypto holdings with transaction data reported by exchanges.
- Revenue officials found Rs 888 crore in VDA’s hidden money as check deposit checks became difficult.
- Investors must report each transaction, exchange, and disposal under the VDA Schedule for FY 2025-26.
The department received more than Rs 888 crore, or about $104 million, from the VDA’s undisclosed amount, according to the Economic Times. The figures show how tax officials use exchange data, TDS filings, and investor returns to track discrepancies.
India keeps 30% of VDA tax locally
India’s core crypto tax rules remain unchanged for FY 2025-26. Gains from digital physical assets are taxed at a flat rate of 30%, while qualified transfers are subject to a 1% tax deducted at source.
The Income Tax Department says that VDA income is taxable without deduction, excluding acquisition costs. The loss of one crypto asset cannot be used to reduce the gains of another asset.
The VDA schedule becomes the check key for filling
Investors must use ITR-2 when reporting crypto as capital gains. Those who treat crypto trading as business income must use ITR-3. Both forms include a VDA schedule for detailed transaction reporting.
Schedule VDA does not allow investors to report only gross returns. Each exchange, exchange, cancellation, and transfer of tax must be filed separately. A crypto-to-crypto exchange can also create a taxable event.
Exchange data raises the risk of mismatch
Budget 2026 added stronger reporting duties for exchanges, custodians, and wallet providers. These businesses must submit user-level transaction data to the Income Tax Department.
That data allows the department to compare investor filings with exchange records. Discrepancies between VDA Schedule, Form 26AS, TDS records, and exchange reports may result in notification.
Offshore Holdings is facing a close review
The total compliance may extend further from 2027. India is compliant with the OECD Crypto-Asset Reporting Framework, which supports cross-border sharing of crypto account data.
As previously reported by crypto.news, India has already moved towards stricter surveillance of digital assets. Recent regulations require platforms to post user-level transaction data, while holding crypto abroad may be easier for authorities to track.
Recent notifications show that crypto tax filing in India has gone beyond self-reporting. Investors using multiple exchanges, DeFi platforms, or offshore accounts are now faced with a higher burden of maintaining comprehensive records.
The risk of overfilling is not limited to large traders. Deficit income, airdrops, fund transfers, or TDS reconciliations can raise questions during review. The door’s message is clear: crypto investors must invest accurately before enforcement reaches them.
