NEW DELHI: India plans to further tighten its regulation of cryptocurrency tractions and could mandate third party reporting from April 1, two people aware of the development said.
It has already put over 4,500 suspected cases involving virtual digital assets (VDAs) under the scanner, they added, asking not to be named.
Citing a presentation made by the Central Board of Direct Taxes (CBDT) to the Standing Committee on Finance, one of them said, “Through its e-verification process, the Income-Tax Department has found data mismatch in more than 4,500 cases involving VDA transactions and is investigating discripiciencies.”
The finance ministry did not respond to an email query. CBDT is an arm of the revenue department of the finance ministry and it regulates activities of the income-tax department.
Although VDAs, including cryptocurrencies are anonymous and borderless, the income-tax department, still tracks all transactions involving domestically-located exchanges through their income-tax returns (ITRs) that have to disclose VDA-related transactions. The assesses have to make disclosure of acquisition and transfer of all such VDAs.
In order to ensure that third parties such as banks and crypto-exchanges mandatorily inform the government about all VDA transactions, the government has already inserted a new provision–285BAA in the Income-Tax Act. CBDT is framing the rules which will be notified soon and the provision could be enforced from April 1, 2026, the first person said.
Although VDAs including cryptocurrencies are unregulated in India, they are under the preview of both direct tax (30% tax on income) and indirect tax (GST).
While presenting the budget on February 1, 2022, Union finance minister Nirmala Sitharaman said: “There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”
Accordingly, she levied a 30% tax on income from transfer of any VDA and made TDS mandatory in order to “capture” the transaction details.
While domestic virtual asset service providers (VASPs) are largely complying with TDS provisions, overseas entities having Indian clients are under the scanner for non-compliance, the second person said. As of November 2025, the total number of registered VASPs with the Financial Intelligence Unit (FIU-IND) was 47.
The government has taken action against around 18 cryptocurrency exchanges for Goods and Services Tax (GST) evasion worth over ₹824 crore, he said. Besides, CBDT’s “NUDGE” campaign (non-intrusive usage of data to guide and enable) sent over 44,000 communications to taxpayers who either invested, or traded in VDAs without reporting the same in their ITRs, he said.
Even as VDAs, including cryptocurrencies are not regulated in India, the Prevention of Money Laundering Act (PMLA) empowers FIU-IND to register VASPs for preventing money laundering and terror financing. Both domestic and offshore platforms catering to users based in India are required to register with FIU-IND.
The central agency under the finance ministry was set up in November 2004 for receiving, processing, analyzing and disseminating the information relating to suspect financial transactions.
