India Uncovers $930M in Unreported Crypto Income, Steps Up Tax Enforcement Ahead of 2026 Filing Season

ChainCatcher reports that India is tightening oversight of crypto taxation, raising the compliance bar for investors as the 2026 filing season approaches. Under current rules, profits from virtual digital assets are taxed at a flat 30% rate, and a 1% tax deducted at source (TDS) applies to transactions above the prescribed threshold. Losses cannot be netted across different assets. While the new Income Tax Act (2025) takes effect on April 1, 2026, the broad tax treatment of crypto remains largely intact. What is changing is enforcement and reporting expectations. Taxpayers must fill out the dedicated Schedule VDA on ITR2 or ITR3 and keep granular, transaction-by-transaction documentation covering trades, swaps, transfers and settlements, rather than relying only on consolidated profit figures. The report says Indian tax authorities will obtain user-level transaction data directly from exchanges, custodians and wallet providers, then automatically match it against filed returns. Any mismatch may be flagged and escalated for scrutiny. Authorities have issued more than 44,000 notices and identified about INR 88.8 billion (roughly USD 930 million) in unreported virtual asset income. Regulators are also expanding surveillance capabilities by combining on-chain analytics with international data-sharing channels. From 2027, India plans to align with the OECD Crypto-Asset Reporting Framework, enabling automatic exchange of cross-border crypto transaction data and increasing visibility into overseas exchange holdings. Common filing issues highlighted include using the wrong return form, failing to report airdrop or staking income, and not properly reconciling 1% TDS records. The report argues that crypto tax compliance in India is moving from after-the-fact declarations to near real-time traceability, making year-round recordkeeping essential.