India’s crypto sector is once again under regulatory focus after a Parliamentary Standing Committee on Finance reportedly classified the country’s virtual digital asset (VDA) ecosystem as “high risk.”
The discussion brought together senior government officials, tax authorities, intelligence agencies, and representatives from major exchanges, including Binance, WazirX, and ZebPay.
Officials reportedly warned lawmakers that crypto-related activity in India is no longer just about speculation or volatile trading. Intelligence inputs linked parts of the ecosystem to money laundering, cyber fraud, terror financing, narcotics trafficking, human trafficking, Ponzi schemes, and illegal cross-border fund movement.
The committee, chaired by BJP MP Bhartruhari Mahtab, was briefed by senior officials from the Revenue Department, Corporate Affairs Ministry, and the Central Board of Direct Taxes (CBDT).
One of the biggest concerns discussed during the meeting was the widening gap between crypto trading activity and tax disclosures.
According to officials, nearly 6.45 lakh individuals were subjected to TDS deductions on crypto transactions during FY23. However, only around 1.39 lakh users actually disclosed crypto-related income while filing tax returns. The mismatch has now become a major red flag for regulators and tax authorities.
Despite India already imposing a 30% tax on crypto gains along with a 1% TDS rule since 2022, trading activity remains strong.
Lawmakers reportedly noted that “thousands of crores” continue flowing into digital assets, with a significant portion moving to offshore exchanges outside India’s direct regulatory oversight.
India has also intensified enforcement over the past year. The Financial Intelligence Unit of India (FIU-IND) reportedly initiated 52 compliance proceedings under anti-money laundering laws, mainly targeting offshore crypto firms operating without proper registration.
Authorities imposed penalties totaling ₹29 crore on platforms including Coinbase, Binance, KuCoin, and Bybit. Officials also blocked 63 URLs and disabled access to 85 crypto-related websites and platforms for non-compliance.
Meanwhile, crypto tax collections have continued rising sharply. VDA-related tax revenue reportedly climbed from ₹269 crore in AY 2023-24 to ₹437 crore in AY 2024-25, while TDS collections increased to ₹364.62 crore.
Indian policymakers are now studying crypto regulations adopted by countries including the US, EU, Japan, Brazil, and China before deciding the next phase of regulation. Officials are also considering stricter reporting norms, PAN-linked crypto ownership tracking, and uniform valuation standards as oversight around the sector continues to tighten.
CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.
All opinions and insights shared represent the author's own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.
Sponsored content and affiliate links may appear on our site. Advertisements are marked clearly, and our editorial content remains entirely independent from our ad partners.
Agentic AI is hungry, and apparently, traditional infrastructure is starting to feel the strain. That…
TAO price exploded more than 21% during Friday's trading session after a sudden development in…
Internet Computer has spent the better part of the past two years trading inside a…
Bitcoin is back in the spotlight, but not because of its price. While the world's…
AAVE price may be up 3% today, but the market’s attention is increasingly shifting toward…
Cardano (ADA) price has surprised the market by gaining more than 11% over the past…
