Minister of State in the Ministry of Finance Pankaj Chaudhary | Photo credit: ANI
Meanwhile, tax deduction at sources (TDS) on transaction of crypto has more than doubled in three years, according to data from the Ministry of Finance presented in Lok Sabha.
In a written response, Chaudhary said, “Under the CBDT’s NUDGE (Non-Intrusive Usage of Data to Guide and Enable) campaign, 44,057 notices have been issued to taxpayers who invested or traded in VDAs but did not report them in Schedule VDA of their Income Tax Returns (ITRs).” Data analytics tools, Project Insight, and internal databases are used to match VDA transaction information with disclosures in ITRs. “TDS returns filed by Virtual Asset Service Providers (VASPs) and taxpayers’ ITRs are also analyzed to identify discrepancies and take appropriate action,” he added.
He further said that the ED has investigated several crypto-related cases under PMLA in which proceeds of crime worth ₹4,189.89 crore have been seized/confiscated/frozen, 29 persons arrested and 22 prosecution complaints filed. One suspect has been declared a fugitive economic offender
TDS collected
Data in another written response from Chaudhary showed that the total TDS collected by crypto exchange platforms from users was over ₹221 crore in 2022-2023, which increased to over ₹511 crore in 2024-2025. During this period, Maharashtra saw collections rise from over ₹142 crore to over ₹293 crore. However, Karnataka recorded the highest growth with the collection reaching around ₹134 crore from ₹39 crore.
As per the Finance Act 2022, TDS is levied at the rate of 1 percent on the transfer of VDA. This applies to all transactions, including transactions involving offshore entities, if the income is subject 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 investigative actions were conducted against 03 Crypto Exchanges and non-compliance with 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 aforesaid search and seizure operations under Section 132 and Survey actions under Section 133A of the Income Tax Act against various entities, these resulted in detection of undisclosed income related to VDA transactions worth ₹888.82 crore,” he said.
Because crypto assets are inherently borderless, they require strong international coordination to avoid regulatory arbitrage. “Therefore, for any regulatory framework for crypto assets to be effective, there must be significant international cooperation on risk-benefit assessment and evaluation of common taxonomy and standards,” Chaudhary said.
Published on December 8, 2025
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