Although crypto -currency is neither legal nor illegal in India, transactions and income thereof are taxed as virtual digital assets
The Ministry of Finance of the Union told the Rajya Sabha on Tuesday that the income tax department sent more than 44,000 e emails and messages to taxpayers who have not announced crypto transactions in their returns.
It also stated that a demand for more than £ 33,000 crore was collected under the black money (unknown foreign income and assets) and imposition of Tax ACT, 2015.
Although crypto -currency is neither legal nor illegal in India, transactions and income thereof are taxed as virtual digital assets (VDA). The term VDA also includes non-fungal tokens (NFTs) and other registered digital assets.
Winning from VDAs are subject to a tax of 30 percent, together with an appropriate surcharge and a CESS of 4 percent.
In addition, a TDS of 1 percent must be deducted from any payment to a resident for the transfer of a VDA. Taxpayers can make their VDA income-income-transaction-qua transaction public in the new ‘Schedule VDA’ in ITR-2 and ITR-3.
The government started taxing VDAs in the tax year 2022-23. In a written response, Minister of Foreign Affairs, Pankaj Chaudary, confirmed that the Central Board or Direct Taxes (CBDT) has discovered several cases of tax evasion with regard to cryptocurrency and VDA investments and has taken the necessary legal action.
When tax evasion is detected, the IT department takes action, including taxpayers, e-verification, reassessment, surveys or search and seizure activities.
“In order to create awareness in taxpayers with regard to the disclosure of VDA and the payment of tax, CBDT recently has the NUDGE (non-reducing use of data to guide and switch) taxpayer campaign, including 44.057 e-mails and messages have been sent to select taxpayers that have been invested in investors.
Chaudary also reported that the total tax of taxpayers for the tax 2022-23 and 2023-24 £ 705 crore was. He also noted that “during search and seizure and research activities unknown income is detected in VDA transactions to around £ 630 crore.”
The Black Money Act
In response to a separate question, Chaudary clarified that neither the income tax law nor the black money (unknown foreign income and assets) and the imposition of tax law use the term ‘black money’.
Based on information about non -known foreign assets, however, the IT department completed 1,021 reviews completed from 31 March 2025. This has resulted in a tax and penalty demand of approximately £ 35,105 Crore and its 163 prosecution complaints.
“The tax question is completed when preference for the Cit (A), ITAT, High Court and the Supreme Court of the Cit (A) preference is preferred,” the minister said.
He added that between 1 July 2015 and 31 March 2025 a recovery of £ 338 crore was made against tax, fine and interest rate requirements that were set under the black money (unknown foreign income and assets) and imposition of the Tax Act.
Earlier, during a one-off three-month compliance window from 1 July to 30 September 2015, under the same law, 684 disclosures were made with non-calculated foreign assets worth £ 4,164 crore.
“The amount that was collected by tax and fine in such cases was around £ 2,476 crore,” said Chaudary.
Published on August 5, 2025
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