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Rizwan Ansari
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Sohrab KhawasSohrab is a passionate cryptocurrency news writer with over five years of experience covering the industry. He keeps a keen interest in blockchain technology and its potential to revolutionize finance. Whether he's trading or writing, Sohrab always keeps his finger on the pulse of the crypto world, using his expertise to deliver informative and engaging articles that educate and inspire. When he's not analyzing the markets, Sohrab indulges in his hobbies of graphic design, minimal design or listening to his favorite hip-hop tunes.
- Dec 31, 2025 08:09 UTC
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Indian Crypto Traders Get Tax Notices as Government Tightens Oversight
Indian crypto traders are receiving tax notices as the government tightens crypto income monitoring.
Notices under Section 133(6) already list crypto income and demand explanations, not confirmations.
The tax department is tracking crypto trades through KYC exchanges, TDS, banks, and AIS data.
Indian crypto traders are increasingly coming under the scanner as the Income Tax Department begins issuing tax notices related to crypto trading income. Over the past few weeks, several traders have reported receiving official tax notices, showing a stricter approach toward crypto compliance in India.
So, what does this mean for Indian crypto traders? Is crypto trading becoming more difficult in India?
Income Tax Notices For Indian Crypto Traders
The notices are being sent under Section 133(6) of the Income Tax Act and are linked to the Assessment Year 2024–25. Unlike earlier years, these notices are not asking whether someone traded crypto. Instead, they already list crypto income details and ask taxpayers to explain them.
According to multiple reports, the notices already include detailed information such as:
- Receipts from crypto or Virtual Digital Asset (VDA) transfers
- Profits or winnings from online trading activities
- PAN-linked data matched with AIS (Annual Information Statement) and TIS
This clearly shows that the government already has access to crypto transaction data and is now actively cross-checking it with tax filings.
How the Government Is Tracking Crypto Transactions
Crypto trading in India is no longer flying under the radar. Authorities are tracking transactions through multiple verified sources, including:
- Indian crypto exchanges that follow strict KYC rules
- TDS deductions on crypto trades and clear bank transaction trails
- AIS and TIS reporting systems linked directly to PAN numbers
This means that anyone trading crypto using Indian exchanges or a KYC-linked platform, their activity is already visible to tax authorities.
No More Warning, Action Time
The key takeaway is that this is not a warning phase anymore. It is an enforcement phase. The tax department is no longer asking questions; it is asking for explanations backed by records.
For traders who did not properly report crypto gains, this could lead to penalties, interest, or further scrutiny.
Is Crypto Trading Getting Difficult in India?
Crypto trading in India is becoming more regulated, especially for everyday traders. Strict tax rules now apply, including a 30% tax on profits with no loss adjustment and a 1% TDS on most trades.
Meanwhile, these rules make quick trading and frequent buying and selling less attractive.
However, some traders see this as a positive step. Crypto is no longer ignored or treated as illegal. It is now officially recognized and taxed, which could bring more transparency and long-term trust to India’s crypto market.
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FAQs
The tax department is cross-checking crypto transactions using exchange data, TDS records, and PAN-linked AIS to ensure gains were properly reported.
Unreported crypto gains may lead to tax demands, penalties, interest, or further scrutiny, depending on the mismatch and response provided.
Crypto trading is legal but heavily taxed and regulated. Compliance is essential, making casual or high-frequency trading less attractive for many users.
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