India Sends 44,000 Crypto Tax Notices, Flags Rs 888.82 Crore ($104M) in Unreported Income

India's Central Board of Direct Taxes (CBDT) has intensified scrutiny of virtual digital asset (VDA) activity, issuing more than 44,000 communications to taxpayers who traded or invested in crypto but did not disclose those transactions in their Income Tax Returns. The CBDT said it has also detected about Rs 888.82 crore (around $104 million) in undisclosed VDA-linked income, identified through search-and-seizure actions and data analytics. The effort is being carried out under the CBDT's NUDGE initiative (Non-Intrusive Usage of Data to Guide and Enable), which uses third-party information and cross-checking of transaction data obtained from crypto exchanges. Since the introduction of a 1% Tax Deducted at Source (TDS) on VDA transfers under Section 194S, trades executed on compliant platforms generate a reportable trail that feeds into the Annual Information Statement, giving authorities a consolidated view of taxpayer activity. The review is not limited to recent transactions. Reassessment notices under Section 148A have been issued for activity going back to FY 2021-22, signaling that the department is examining prior years to identify gaps. The CBDT's push runs alongside broader enforcement actions. The Enforcement Directorate is conducting parallel probes into alleged VDA-related money laundering and has attached Rs 4,189.89 crore in linked proceeds. India's current crypto tax framework was laid out in the 2022 Union Budget, which introduced a flat 30% tax on gains from VDAs beginning FY 2022-23. Losses cannot be set off against gains, preventing investors from reducing taxable profits by netting losing trades. Combined with the 1% TDS, the regime is among the more stringent globally, with TDS serving both as an upfront collection mechanism and a data tool enabling large-scale compliance drives. For investors, the message is that VDA gains are now firmly within the tax net. Traders who have been reporting and paying the 30% tax may see little change, while those who underreported or failed to report face reassessments, penalties, and, in more serious cases, prosecution.