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Income Tax Department investigating evasion from crypto assets

The Department under the Central Board of Direct Taxes (CBDT) has identified such crypto transactions for verifications and has sent emails to defaulting persons to review their income tax returns

2 min readNew DelhiJun 14, 2025 04:15 AM IST

India had introduced a 30 per cent flat income tax on gains made from cryptocurrencies from April 2022 after inserting Section 115BBH in the Income Tax Act, 1961 by the Finance Act, 2022 (Representative image)

The Income Tax Department is investigating tax evasion and laundering of unaccounted income by high-risk persons through investments in virtual digital assets (VDAs) after its data analytics showed “significant violations” of income tax rules by individuals in transactions involving crypto assets, sources said. The Department under the Central Board of Direct Taxes (CBDT) has identified such crypto transactions for verifications and has sent emails to defaulting persons to review their income tax returns (ITRs) to update any income that has not been properly declared on account of VDA transactions, they said.

“Data analytics has shown that a significant number of persons have violated provisions of Income-tax Act by not filing Schedule VDA of ITR and offering tax on the income earned at a lower rate or claiming cost indexation. ITRs filed by taxpayers are being verified with TDS returns filed by the Virtual Asset Service Providers (VASPs) popularly known as crypto exchanges and defaulters may be selected for further verification or scrutiny,” a source said.

The provision does not allow deduction of any expenses except cost of acquisition. Also, set-off of loss from VDA investment or trading is not allowed to be set off against any other income or for carry forward to subsequent years.

“Such entities and individuals which are engaged in Virtual Digital Asset (VDA) transactions and have failed to comply with the Income-tax Act, 1961 have been identified for verification…the CBDT has recently sent emails to thousands of defaulting persons to review their ITRs and update if any income on account of VDA transactions have not been properly declared,” a source said.

This is the third such “NUDGE (Non-intrusive Usage of Data to Guide and Enable)” campaign by the CBDT in the last six months. Earlier campaigns were linked to declaration of foreign assets and income by taxpayers and withdrawal of bogus claims of deduction under Section 80GGC of the I-T Act.

Aanchal Magazine

Aanchal Magazine is a Deputy Associate Editor with The Indian Express, serving as a leading voice on the macroeconomy and fiscal policy. With 15 years of newsroom experience, she is recognized for her ability to decode complex economic data and government policy for a wider audience. Expertise & Focus Areas: Magazine’s reporting is rooted in "fiscal arithmetic" and economic science. Her work provides critical insights into the financial health of the nation, focusing on: Macroeconomic Policy: Detailed tracking of GDP growth, inflation trends, and central bank policy actions. Fiscal Metrics: Analysis of taxation, revenue collection, and government spending. Labour & Society: Reporting on labour trends and the intersection of economic policy with employment. Her expertise lies in interpreting high-frequency economic indicators to explain the broader trajectory of the Indian economy. Personal Interests: Beyond the world of finance and statistics, Aanchal maintains a deep personal interest in the history of her homeland, Kashmir. In her spare time, she reads extensively about the region's culture and traditions and works to map the complex journeys of displacement associated with it. Find all stories by Aanchal Magazine here ... Read More

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