India’s tax authority has stepped up its game on crypto reporting. Thousands of taxpayers are getting notices about missing income from virtual digital assets.
Crypto exchanges, or VASPs, file TDS reports, and those numbers don’t always match what shows up on income tax returns. That gap has triggered a wave of alerts and letters.
And you cannot set off any losses or carry them forward. A lot of taxpayers tried to use cost indexation or claim VDA losses under other heads. That mistake now carries interest charges and penalties.
This is the third “NUDGE” ((Non-intrusive Usage of Data to Guide and Enable) drive in six months. The first two focused on undeclared foreign assets and false political donation claims under Section 80GGC.
The idea is to use data, not raids, to get people to fix their returns. The tax body combines bank data, TDS filings from VASPs and even blockchain checks. Officials say it’s a soft‑touch way to shape behavior without heavy‑handed tactics.
For anyone trading small amounts, the stakes just got much higher. If they’ve made a profit in crypto since the 2022‑23 fiscal year, they need to show it. A missed item in Schedule VDA could land them a notice and extra bills.
Exchanges also face pressure to report correctly. Any slip‑ups in their TDS filings could spark more inquiry into their customers.
Attention now turns to how traders and service providers will react. Some may roll out better record keeping. Others might cut back on trades to avoid the heavy tax. Institutions could take comfort that the rules are clear and enforced. That legal certainty may draw more serious players into the market.
Featured image from Unsplash, chart from TradingView
