Cryptocurrency Tax Compliance Falls Short of Transaction Volume in India: Report
According to India's taxation authorities, less than 25% of approximately 645,000 individuals conducting cryptocurrency transactions disclosed these activities in their tax filings.
According to reports, India's taxation authorities have discovered significant discrepancies in cryptocurrency tax compliance, issuing alerts that international exchanges, personal wallets and peer-to-peer (P2P) trading platforms are complicating efforts to monitor digital asset activities.
A Wednesday report by Reuters citing government documentation revealed that under 25% of the 645,000 people who engaged in cryptocurrency transactions during the fiscal year concluding in March 2023 disclosed these trades in their tax filings. Additionally, the department's estimates suggest India hosts approximately 39 million cryptocurrency traders with holdings exceeding $2.1 billion in digital assets as of the end of May.
These revelations introduce a tax compliance dimension to the nation's ongoing cryptocurrency policy discussions, shifting the conversation beyond the central bank's anxieties regarding financial stability toward concerns about international trading platforms and collectible tax revenues. According to Chainalysis' 2025 Global Crypto Adoption Index, India secured the top position globally.
This disclosure arrives mere days following the Reserve Bank of India (RBI) endorsing a restrictive approach toward cryptocurrency assets. On July 3, the nation's central banking authority advised legislators to maintain separation between traditional banking institutions, financial service providers and cryptocurrencies along with privately developed stablecoins. According to reports, the RBI stated that outright prohibition continues to be a viable policy alternative and suggested preventing the utilization of digital assets for payment processing and settlement activities.
Cointelegraph reached out to India's Central Board of Direct Taxes for commentary but did not receive any response before this article went to press.
Cryptocurrency tax enforcement remains a global challenge
India is far from being the sole country facing difficulties in incorporating cryptocurrency activity within its taxation framework. According to a June 3 report published by Globes, a domestic business news publication, Israel's voluntary disclosure initiative targeting cryptocurrency earnings failed to meet anticipated outcomes.
According to reports, the Israel Tax Authority (ITA) had anticipated collecting between 2 billion and 3 billion Israeli shekels (approximately $650 million to $986 million) through this initiative, which provided criminal immunity protections to taxpayers willing to reveal previously undisclosed capital assets.
Nevertheless, merely 289 disclosure applications had been filed since the program's inception in August 2025, with declared capital amounting to 676.5 million shekels and projected tax obligations totaling 40.9 million shekels. This outcome represented a significant shortfall when measured against initial projections and the calculated cryptocurrency tax deficit.
Globes referenced taxation specialists who indicated that the program's failure to incorporate an anonymous disclosure mechanism had diminished the motivation for cryptocurrency holders to participate voluntarily.