Minister of State in the Finance Ministry Pankaj Chaudhary
| Photo Credit:
ANI
Over 44,000 communications have been sent to taxpayers for not disclosing crypto transactions in the Income Tax Returns, Minister of State in the Finance Ministry Pankaj Chaudhary told Lok Sabha on Monday. At the same time, the Enforcement Directorate (ED) has attached proceeds of crime worth over ₹4,000 crore in crypto-related cases under the anti-money laundering law.
Meanwhile, mop up through Tax Deducted at Sources (TDS) on transaction of crypto has more than doubled in three years, Finance Ministry data, presented in Lok Sabha showed.
In a written reply Chaudhary said: “Under the CBDT’s NUDGE (Non-Intrusive Usage of Data to Guide and Enable) campaign, 44,057 communications have been sent to taxpayers who invested or traded in VDAs but did not report these in Schedule VDA of their Income Tax Returns (ITRs).” Data analytics tools, Project Insight and internal databases are used to match information on VDA transactions with disclosures in ITRs. “TDS returns filed by Virtual Asset Service Providers (VASPs) and taxpayers’ ITRs are also analysed to identify discrepancies and take appropriate action,” he added.
Further, he said that the ED has investigated several crypto-related cases under PMLA, attaching/seizing/freezing proceeds of crime worth ₹4,189.89 crore, arresting 29 persons, and filing 22 prosecution complaints. One accused has been declared a Fugitive Economic Offender
TDS collected
Data in another written reply by Chaudhary showed that total TDS collected from users by crypto exchange platforms was over ₹221 crore in 2022-23 which rose to over ₹511 crore in 2024-25. During this period, Maharashtra saw collection rising to over ₹293 crore from over ₹142 crore. However, Karnataka recorded highest growth with collection reaching around ₹134 crore from ₹39 crore.
Per Finance Act 2022, TDS at the rate of 1 per cent is levied on the transfer of VDA. This applies to all transactions, including those involving offshore entities, if the income is chargeable to tax in India. “It has been observed that certain offshore cryptocurrency exchanges serving Indian users are not complying with the TDS provisions prescribed under the Income-tax Act,” Chaudhary said.
He added that the survey actions were carried out against 03 Crypto Exchanges and non-compliance of TDS provision to the tune of ₹39.8 crore and undisclosed income to the tune of ₹125.79 crore, were detected. “In addition to the above search and seizure operations under Section 132 and Survey actions under Section 133A of the Income Tax Act against various entities resulted in the detection of undisclosed income related to VDA transactions amounting to ₹888.82 crore,” he said.
As crypto assets are inherently borderless, they require strong international coordination to prevent regulatory arbitrage. “Therefore, any regulatory framework for crypto assets can be effective only with significant international collaboration on the evaluation of the risks and benefits and the evaluation of common taxonomy and standards,” Chaudhary said.
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