India’s Tax Department Flags Crypto Enforcement Risks in Briefing to Parliament

Overview

• Tax officials presented concerns to the parliamentary finance committee, echoing the Reserve Bank of India’s skepticism toward wider crypto adoption.
• They cited pseudonymous ownership, borderless transfers, and transactions outside regulated channels as core obstacles to tracing activity and taxing gains.
• Offshore exchanges, private wallets, and decentralized platforms were identified as blind spots that reduce transparency and complicate recovery of dues across jurisdictions.
• Authorities are leaning on a 30% flat tax, a 1% TDS on all VDA transfers, retrospective audit powers under Section 158B, and planned AI and CARF data cross‑matching to detect discrepancies.
• The FIU and Ministry of Home Affairs are intensifying scrutiny of exchanges, with reports of laundering and flagged irregularities including misuse of customer funds, extreme leverage, and insider trading under investigation.