India is intensifying its efforts against cryptocurrency tax evasion. The Central Board of Direct Taxes (CBDT) has confirmed the adoption of artificial intelligence and global data-sharing networks to identify unreported crypto transactions. This advanced strategy bolsters India’s existing crypto taxation framework by integrating international data-sharing capabilities, rendering it more challenging for individuals to conceal assets overseas.
AI Joins the Hunt
According to CBDT chairman Ravi Agrawal, the department utilizes AI to analyze over 6.5 billion transaction records annually, aiming to cross-reference filed tax returns against actual trading activity on cryptocurrency exchanges. The objective is to identify discrepancies that indicate undeclared transactions.
🚨🇮🇳BREAKING: INDIA TO WATCH CRYPTO AND CLOUD STORAGE MORE CLOSELY
India’s tax department (CBDT) is enhancing its scrutiny on cryptocurrencies, online banking, and cloud storage to prevent tax evasion. Starting April 1, 2026, data from wallets and cloud accounts can serve as evidence during tax evaluations… source
— Crypto Jargon (@Crypto_Jargon) July 24, 2025
Agrawal made it clear that these tools are reserved for formal investigations and are not deployed for indiscriminate scanning of taxpayer activities.
Discrepancies Lead to Instant Notices
A key area of focus is Tax Deducted at Source (TDS) data, where exchanges are mandated to deduct 1% from every crypto transaction. The CBDT conducts audits comparing this deduction with individual tax returns. Automated notices are sent for discrepancies exceeding ₹100,000. Since the tax framework’s inception in 2022, the government has amassed approximately ₹7,000 crore from crypto-related activities, including the 30% tax on profits.
India Taps Global Crypto Reporting
India participates in the Crypto-Asset Reporting Framework (CARF), allowing for automatic data exchange among governments when crypto platforms service users in multiple countries. This initiative aims to address hidden trading activities and offshore wallets by enhancing transparency in cross-border transactions.
Officials Say Privacy is Still Respected
Authorities reassured the public that access to detailed transaction data will occur only during official tax raids, aimed at avoiding unnecessary surveillance on benign cryptocurrency users.
Collection Numbers Are Already Piling Up
The crypto tax regime generated nearly ₹2,700 crore in its initial year and surged to over ₹4,300 crore the subsequent year, amassing around ₹7,000 crore. Additionally, unrelated investigations leveraging similar technologies have yielded over ₹11,000 crore in value adjustments.
A Bigger Overhaul Is Coming
A new income tax code is being prepared for rollout by April 2026, with the CBDT anticipating tighter domestic enforcement and greater international collaboration, inviting more nations to join CARF for enhanced data-sharing protocols.
Individuals engaging in crypto trading within India should prepare for stricter oversight as enforcement mechanisms evolve, ensuring that compliance with tax obligations is more rigorously maintained.
Key Takeaways
- India is employing AI tools and global data-sharing frameworks to identify undeclared crypto trades and ensure tax compliance.
- The tax department scrutinizes over 6.5 billion records and sends notices whenever exchange information misaligns with filed returns.
- The country has secured ₹7,000 crore since 2022 via a 1% TDS on crypto transactions and a 30% tax on profits.
- A new tax code is scheduled for introduction by 2026, aiming for stringent enforcement and increased international cooperation.
