India Crypto Tax: How Compliance Can Unlock ₹66,000 Crore More
- TIOL–TKF says India could unlock ₹66,000+ crore by FY30 with 50% compliance.
- India’s Schedule VDA reporting from FY25–26 aims to match TDS with ITR filings.
- India’s CARF plans and stronger forensics target offshore wallets, not higher tax rates.
India could unlock more than ₹66,000 crore in potential crypto-linked tax collections between FY25 and FY30 without raising tax rates. The opportunity depends on higher compliance, not higher taxation.
The Taxation of Digital Assets in India report by TIOL–TKF estimates this upside if onshore compliance rises from about 10% to 50%. It compares that potential with ₹706 crore collected up to FY23–24.
Onshore compliance shift could unlock ₹66,000 crore by FY30
The TIOL–TKF report frames the gap as a compliance and reporting issue. It links low onshore compliance with uneven obligations across platforms, which can weaken tax capture. A move from about 10% to 50% onshore compliance could change collections materially. TIOL–TKF estimates it could unlock more than ₹66,000 crore between FY25 and FY30.
However, the report does not call for higher rates. It argues for rationalised taxation, stronger reporting, and tighter compliance mechanisms.
The report also highlights uniform obligations for offshore platforms. It ties those obligations to better alignment and fewer incentives to shift activity offshore.
Related: India Crypto Industry Pushes Tax Reform Ahead of Feb Budget
Schedule VDA, 30% tax on gains, and 1% TDS rules
As of January 2026, India taxes profits from selling, swapping, or spending crypto at a flat 30% rate. Investors may also pay a surcharge and a 4% cess. Section 115BBH governs taxation on Virtual Digital Assets (VDAs). The rules allow deductions only for the cost of acquisition, and they disallow other expenses.
In addition, India applies a 1% Tax Deducted at Source (TDS) on VDA transfers under Section 194S from July 1, 2022. The TDS applies to the transaction value, even when a trade books a loss.
Income Tax Return (ITR) filings now require a dedicated disclosure for crypto activity through Schedule Virtual Digital Assets, widely known as Schedule VDA. Under the Union Budget 2025 framework, mandatory reporting is scheduled to start in FY 2025–26, with disclosures tied to a newly defined section referenced as section 158B.
Meanwhile, the Interim Budget 2025 kept the 30% tax on VDA gains and the 1% Tax Deducted at Source (TDS) unchanged. Still, it pushed for stronger transparency through expanded reporting requirements.
CARF reporting plans target offshore leaks
Offshore activity remains central to the compliance debate. Sumit Gupta, Chief Executive Officer of CoinDCX, said the 1% TDS rule pushed more than 5 million Indian users to offshore exchanges. He also said more than $42 billion in crypto trading volume shifted to foreign platforms between July 2022 and July 2023.
Gupta said the government lost an estimated $4.2 billion in tax revenue while collecting only $31 million via TDS in that period. He also welcomed India’s move toward the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework (CARF) as a way to reduce regulatory arbitrage.
Business Standard reported that India plans to adopt CARF by April 2027. It also said the Finance Ministry aims to sign the Multilateral Competent Authority Agreement (MCAA), extending automatic global data sharing to digital assets.
Tax enforcement is also becoming more data-driven. Authorities use systems such as Project Insight and the Non-Filer Monitoring System (NMS) to match exchange-filed TDS with tax return disclosures.
A “NUDGE” can follow when an Income Tax Return does not match the exchange TDS records. Discrepancies above ₹1 lakh can trigger official notices or audits.
The enforcement toolkit is also expanding operationally. Tax authorities are also building capability on the ground. Officers are undergoing training in blockchain analytics, digital forensics, and crypto wallet tracing. In addition, the government has partnered with the National Forensic Science University (Goa) to strengthen specialised training for officers.
As of April 1, 2026, tax investigations may rely more heavily on digital trails, including app logs. During income tax raids, officials may also inspect crypto wallets, strengthening the deterrence against non-disclosure.
Against that backdrop, the TIOL–TKF estimate signals a different path to higher revenue. It indicates India can lift collections through reporting alignment, offshore coverage, and tighter compliance, while keeping India’s crypto tax rates unchanged.
