Why did India report gaps in cryptocurrency tax filings?

India found that fewer than 25% of the 645,000 people who traded cryptocurrency during the year ended March 2023 reported those transactions on their tax returns. Tax officials said offshore exchanges, private wallets and peer-to-peer trading made cryptocurrency activity more difficult to track.

What are the cryptocurrency trading figures reported by India?

India estimated that about 39 million people held more than US$2.1 billion in cryptocurrency at the end of May. The tax department also found that fewer than one in four of the 645,000 identified cryptocurrency traders declared their transactions for tax purposes.

How is India responding to cryptocurrency tax compliance?

India is increasing scrutiny of cryptocurrency trading as tax authorities investigate reporting gaps and offshore activity. The findings add tax enforcement to the country's broader review of cryptocurrency regulation and policy.

Why is cryptocurrency tax enforcement challenging worldwide?

Cryptocurrency tax enforcement remains difficult because offshore exchanges, private wallets and peer-to-peer trading can reduce transaction visibility. Similar challenges have been reported in Israel, where a voluntary cryptocurrency tax disclosure programme attracted only 289 applications despite significantly higher revenue expectations.

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India finds crypto tax reporting gaps

Q: What does the Reserve Bank of India's cryptocurrency policy mean?

The Reserve Bank of India said prohibition remains a recognised policy option and recommended keeping banks and financial institutions insulated from cryptocurrencies and privately issued stablecoins. The recommendation forms part of the country's ongoing review of digital asset regulation.

Written by Jon CuthbertPublished Jul 8, 2026, 11:45 PM

India found that fewer than 25% of 645,000 people who traded cryptocurrency reported those transactions on tax returns.
Officials estimate about 39 million crypto traders held more than US$2.1 billion in digital assets at the end of May.
The findings may strengthen tax enforcement as regulators continue reviewing the country's cryptocurrency policy.

India's tax department found that fewer than a quarter of 645,000 people who traded cryptocurrency during the year ended March 2023 reported those transactions on their tax returns, highlighting potential gaps in tax compliance.

Government documents cited by Reuters estimated that about 39 million people in India held more than US$2.1 billion in cryptocurrency at the end of May, while officials said offshore exchanges, private wallets and peer-to-peer trading made activity harder to monitor.

“Prohibition remains a recognised policy option,” the Reserve Bank of India said in its July 3 recommendations on cryptocurrency policy.

The report said the findings have expanded India's cryptocurrency debate beyond financial stability to include offshore trading and potential tax revenue, while the Central Board of Direct Taxes had not responded to requests for comment.

The report comes as India continues reviewing its cryptocurrency framework, and because the announcement involved government policy rather than a listed company, there was no share price reaction.

India was ranked first in Chainalysis' 2025 Global Crypto Adoption Index, while the Reserve Bank of India recently recommended keeping banks and financial institutions insulated from cryptocurrencies and privately issued stablecoins.

The challenges mirror those seen in Israel, where a voluntary cryptocurrency tax disclosure programme reportedly received only 289 applications despite authorities expecting to collect between 2 billion and 3 billion Israeli shekels in additional tax revenue.