India Tax Department Warns Crypto's Design Thwarts Oversight, Flags Offshore and DeFi Risks

Overview

• In a briefing to Parliament’s finance panel, tax officials said pseudonymous, cross‑border, near‑instant transfers make tracing owners and taxable income difficult.
• Offshore exchanges, private wallets and DeFi were identified as key blind spots that limit jurisdiction and hinder recovery of dues.
• Authorities highlighted an enforcement framework that includes a 30% tax on crypto gains, 1% TDS on transfers, and Section 158B for retrospective audits up to 48 months with penalties up to 70%.
• The FIU has approved 49 platforms for compliance, yet FIU‑registered and offshore venues face stepped‑up scrutiny following laundering reports now with the Home Affairs Ministry.
• Officials plan AI‑driven cross‑matching and international data sharing under the Crypto‑Asset Reporting Framework to reconcile exchange TDS with tax returns and trigger notices for discrepancies above ₹1 lakh.