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India hunts 400 wealthy crypto traders hiding Binance profits from 42% tax

Indian authorities intensify their India crypto tax investigations, focusing on undeclared offshore holdings and Binance-linked transactions between 2022 and 2025.

by Moses Edozie
4 hours ago
in Crypto News
Reading Time: 3 mins read
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CBDC Indian Digital Currency Users Reaches 5 Million Amid Cautious Expansion

CBDC Indian Digital Currency Users Reaches 5 Million Amid Cautious Expansion

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India’s tax authorities are stepping up enforcement efforts in a sweeping India crypto tax crackdown, targeting more than 400 high-net-worth individuals (HNIs) accused of concealing digital asset profits. The move is part of a coordinated national effort to close loopholes in cryptocurrency taxation, particularly involving offshore exchanges such as Binance.

According to officials, many investors failed to disclose their crypto holdings and profits on Binance, believing offshore storage could shield them from tax obligations. The Income Tax Department (I-T) confirmed that it is tracing undeclared trades and digital assets held between the 2022–23 and 2024–25 fiscal years.

An internal communication circulated to regional tax offices has directed the Central Board of Direct Taxes (CBDT) to compile and report findings by October 17. “The investigation wing of the I-T department across major cities has been mobilized to identify and act on potential non-disclosures,” a senior CBDT official reportedly told local media.

The campaign underscores India’s renewed commitment to enforcing India crypto tax compliance amid growing concerns that wealthy traders are using offshore accounts and stablecoins to evade taxes.

Crypto Tax Fraud Conviction
Crypto Tax Crackdown 

Complex trading patterns drive crypto tax evasion

Under India’s current tax regime, crypto gains are taxed at rates ranging between 33% and 42%, depending on income brackets, in addition to a 1% tax deducted at source (TDS) on every crypto sale. Despite these provisions, many investors have reportedly exploited blockchain anonymity to mask profits.

“The tax department is empowered to issue a summons to confirm if due reporting is being done while filing the return of income by the taxpayer,” Siddharth Banwat, Chartered Accountant, Mumbai. He added that taxpayers who have taken “an aggressive position and not reported the income” still have an option to rectify it by filing an updated return, albeit at an additional tax cost.

Officials noted that many cases involve multi-layered crypto transactions where users move assets between wallets, exchanges, and stablecoins, making enforcement difficult. For example, a trader might buy USDT, transfer it to an offshore Binance wallet, exchange it for Bitcoin, and later cycle profits back through the same token, all without declaring these movements for India crypto tax purposes.

This pattern of trading complicates tax oversight and increases the likelihood of unintentional non-compliance, particularly when traders fail to declare such holdings under the Foreign Assets (FA) schedule of India’s Income Tax Return (ITR) form.

Binance cooperation boosts data transparency

The enforcement drive gains strength following Binance’s registration with India’s Financial Intelligence Unit (FIU) earlier this year. The registration requires Binance to report suspicious crypto transactions and share user data with Indian authorities, a development seen as critical to improving India crypto tax transparency.

India’s FIU serves as the central body for monitoring and investigating money laundering and illicit fund flows. Its arrangement with Binance now allows authorities to trace Indian users’ transactions that might previously have gone undetected.

Many traders who believed offshore transactions were beyond scrutiny are now under investigation. “Investors who moved digital assets abroad under the assumption that they would escape India crypto tax scrutiny are now realizing that these transactions are traceable,” said a senior FIU source familiar with the investigation.

Under India’s Liberalized Remittance Scheme (LRS), residents can invest up to $250,000 annually in foreign assets, but most banks require clients to declare that these funds will not be used for crypto-related activities. However, authorities say several investors circumvented this by transferring funds through third-party accounts and failing to report their digital holdings overseas.

Policy implications for India’s digital economy

The ongoing India crypto tax investigations highlight the government’s increasing vigilance toward digital asset regulation and cross-border money flows. With over 115 million crypto users, India remains one of the world’s largest cryptocurrency markets, but compliance gaps persist.

Analysts suggest that stricter enforcement could push investors toward greater transparency while also prompting the government to refine its tax framework to accommodate evolving blockchain technologies.

As authorities prepare their findings ahead of the October 17 deadline, the message from New Delhi is clear: tax evasion in the crypto sector, particularly under the India crypto tax regime will face tougher scrutiny and possible penalties.

Tags: binanceblockchainCBDTcompliancecryptodigital assetsenforcementFIUindiaoffshoretax
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Moses Edozie

Moses Edozie

Moses Edozie is a writer and storyteller with a deep interest in cryptocurrency, blockchain innovation, and Web3 culture. Passionate about DeFi, NFTs, and the societal impact of decentralized systems, he creates clear, engaging narratives that connect complex technologies to everyday life.

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