India Tax Agency Finds 75% of Crypto Traders Skip Filings

India's income tax department has uncovered a significant compliance shortfall in cryptocurrency reporting: fewer than one in four of the 645,000 individuals identified as crypto traders actually declared those transactions on their tax returns, according to a new report cited by Cointelegraph. The gap reveals a potentially massive pool of unreported digital-asset gains sitting outside the government's reach.

The finding arrives as Indian regulators have worked to tighten oversight of the country's fast-growing crypto market. India introduced a flat 30% tax on virtual digital asset gains in 2022, alongside a 1% tax deducted at source on crypto transactions — measures explicitly designed to create an audit trail and force greater transparency. Despite those tools, the data suggests enforcement has yet to translate into widespread voluntary compliance.

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The scale of the discrepancy — roughly 480,000 traders who transacted in crypto but did not file corresponding disclosures — points to either deliberate evasion or widespread confusion about reporting obligations. Analysts watching the sector have long warned that punitive tax rates could push retail participants toward peer-to-peer or offshore platforms that are harder for authorities to monitor, complicating collection efforts further.

For Indian regulators, the report underscores the difficulty of matching on-chain transaction data with individual taxpayer identities at scale, even when exchanges operating domestically are required to withhold and remit taxes. Whether the government moves to escalate audits, issue notices to identified non-filers, or revisit its tax structure to encourage compliance remains to be seen. The mismatch between trading activity and reported income sets up a likely enforcement push in the months ahead.

Continue reading at Cointelegraph.