India’s Central Board of Direct Taxes just sent a very clear message to crypto traders who thought they could quietly skip the reporting line: we see you.
The CBDT issued over 44,000 communications to taxpayers involved in trading or investing in virtual digital assets who failed to report those activities on their Income Tax Returns. Alongside that blitz, authorities identified approximately Rs 888.82 crore, roughly $104 million, in undisclosed VDA-related income through search-and-seizure operations and data analysis.
How India built its crypto surveillance machine
The enforcement push is part of the CBDT’s NUDGE program, which stands for Non-Intrusive Usage of Data to Guide and Enable. The system works by cross-referencing transaction data pulled directly from crypto exchanges. Since India mandated a 1% Tax Deducted at Source on all VDA transfers under Section 194S, every trade on a compliant exchange generates a data trail. That trail feeds into the Annual Information Statement, which gives tax authorities a near-complete picture of a taxpayer’s financial activity.
The scrutiny isn’t limited to recent activity either. Reassessment notices have been issued under Section 148A for transactions dating back to FY 2021-22, meaning the CBDT is combing through years of trading history to close gaps.
