India VDA tax notices: 44,000+ cases and $104M undisclosed income

India’s Income Tax Department has issued 44,000+ VDA tax notices after matching taxpayers’ virtual digital asset (VDA) reporting with exchange-reported transaction data. Authorities reportedly identified Rs 888 crore (about $104 million) in undisclosed VDA income, indicating enforcement is shifting from self-declaration to external data verification. For FY 2025–26, the key filing focus is Schedule VDA. Taxpayers are expected to report each crypto trade, swap, disposal, and taxable transfer separately. Crypto-to-crypto swaps may be treated as taxable events, and Schedule VDA does not allow a “net” reporting approach. The notices also raise reconciliation risk. Officials cross-check Schedule VDA with exchange records and TDS/Form 26AS-style reporting. Mismatches can trigger further notices, including for staking income, airdrops, wallet transfers, and cases where TDS reconciliation is missed. For traders, the immediate takeaway is operational compliance. Maintain complete records of buy prices, sale proceeds, swap history, wallet transfers, and fees, and reconcile them against Forms like 26AS. The VDA tax notices and tighter user-level reporting duties for exchanges, custodians, and wallet providers (plus alignment with the OECD Crypto-Asset Reporting Framework) should increase compliance costs and reduce reporting ambiguity over time. In short: VDA tax notices are becoming more data-driven, so better bookkeeping and cross-venue reconciliation are essential.