India Steps Up Crypto Tax Scrutiny on Past Trades and Unreported Assets
Indian tax authorities have launched an intensified campaign to uncover undeclared crypto activity and other hidden assets from fiscal years 2016–17 through 2022–23. The Income Tax Department has issued over 1.6 million notices to taxpayers, including crypto traders, seeking details of past virtual digital asset transactions, unreported jewellery, cash and movable assets. Major cryptocurrency exchanges have been directed to share extensive client data, including transaction histories and wallet addresses. This drive marks a significant escalation in India’s crypto tax enforcement, aiming to boost compliance and recover unpaid levies. Traders may face revised tax bills, penalties and possible legal disputes if discrepancies emerge. The move could prompt a surge in voluntary disclosures as the government tightens reporting norms. Crypto tax compliance is now a critical consideration for Indian traders navigating regulatory changes.
Bearish
Heightened crypto tax enforcement in India is likely to exert bearish pressure on the domestic market. Historically, stringent tax notices and compliance demands—such as the US IRS’s crypto reporting push—have led to reduced trading volumes and increased short‐term sell‐offs as investors lock in gains ahead of potential liabilities. In the short term, Indian traders may liquidate positions to cover back taxes or avoid penalties, dampening demand. Over the long term, clearer tax rules can improve market legitimacy and institutional confidence, but the immediate effect is likely negative as participants adjust to higher compliance costs and uncertainty.