The government has told Parliament that over 44,000 tax notices have been issued to people who traded in crypto but did not report it in their Income Tax Returns.
This single number shows how large the unreported trail is — thousands of investors bought and sold digital assets, but their gains never made it to official records.
Crypto unregulated, but not unwatched
India does not have a law specifically regulating cryptocurrencies yet. The government says crypto assets are inherently borderless, so regulating them locally without global alignment may not work.
“Crypto-assets/Virtual Digital Assets (VDAs) are unregulated in India, and the government does not collect data on them. As these assets are inherently borderless, they require strong international coordination to prevent regulatory arbitrage. Therefore, any regulatory framework for crypto assets can be effective only with significant international collaboration on the evaluation of the risks and benefits and the evaluation of common taxonomy and standards,” the government said replying to queries around crypto regulations.
But lack of regulation doesn’t mean lack of action
Tax authorities have uncovered Rs 888.82 crore in undisclosed income from crypto transactions during search and seizure drives. When officials cross-checked trading records with tax filings, the missing disclosures became obvious — triggering mass notices.
To detect evasion, the Income Tax Department is using project insight, internal analytics systems and data from crypto exchanges’ TDS filings.
These tools help match crypto transactions with ITRs — identifying who traded but failed to report.
Crypto under money laundering lens
“The government has brought VDAs under the Prevention of Money Laundering (PMLA), 2002, making VASPs Reporting Entities and required to submit specified and suspicious transaction reports to FIU-IND. These reports are analysed and shared with law enforcement agencies for further action. The Enforcement Directorate has investigated several crypto-related cases under PMLA, attaching/seizing/freezing proceeds of crime worth Rs 4189.89 crore, arresting 29 persons, and filing 22 prosecution complaints.”
“One accused has been declared a Fugitive Economic Offender. The Prohibition of Benami Property Transactions Act, 1988, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, apply to all assets, including VDAs,” the Parliament was informed.
Other laws apply too
Crypto might look virtual, but legally it is treated like any other asset. Action can be taken under:
The Benami Act (if assets are held in someone else’s name)
The Black Money Act (for undisclosed overseas holdings)
Building teams to catch digital crime
Because crypto crime requires tech expertise, officers are being trained in:
-Blockchain investigation
-Digital forensics
-Cyber law and evidence tracking
Training programmes and specialised workshops — including at NFSU Goa — are underway.
Big message? Crypto may be new, but tax laws are not
The government’s 44,000 notices show that the era of “trade quietly and go unnoticed” is over.
India may still be working on a full regulatory framework, but surveillance, money laundering provisions, tax enforcement and skill-building indicate one thing:
Crypto may be borderless — but it is no longer invisible. And black money routed through it is firmly on the government’s radar.