Less than a quarter of India’s 645,000 crypto traders reported their transactions in the last year. This highlights challenges for tax enforcement and raises questions about offshore trading.
According to recent reports from Reuters, fewer than one-quarter of India's approximately 645,000 individuals who made cryptocurrency transactions during the fiscal year ending March 2023 filed them on their tax returns. The Indian government has identified significant gaps in crypto tax reporting, particularly among those using offshore exchanges and private wallets.
The Reserve Bank of India (RBI) recently supported a containment strategy for cryptocurrencies, urging lawmakers to protect financial institutions from the use of digital assets in payments and settlements. This move adds another layer of complexity as it aligns with broader regulatory concerns about crypto’s impact on financial stability.
India's efforts to enforce tax laws related to cryptocurrency are part of a global challenge. A similar situation exists in Israel, where a voluntary disclosure program aimed at collecting taxes from crypto profits failed to meet expectations. Only 289 disclosures were submitted since the program launched last August, far short of the ITA’s initial projections.
The Indian government has estimated that there are about 39 million crypto traders holding over $2.1 billion in assets as of May 2026. This large unreported market raises questions about how effectively tax authorities can track and enforce compliance with existing regulations, especially given the decentralized nature of cryptocurrency transactions.
The implications for the broader market include increased scrutiny on offshore exchanges and private wallets, which are seen as critical to evading traditional regulatory mechanisms. Traders should be aware that these gaps in reporting could lead to stricter enforcement measures or new regulations aimed at increasing transparency.
Traders and investors in India should monitor ongoing developments closely, particularly any legislative changes or guidance from the Central Board of Direct Taxes (CBDT) on how to comply with crypto tax laws.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.