India Set to Tighten Crypto Regulation, Likely to Mandate Reporting From April 1
India is preparing to strengthen its oversight on the digital asset industry, introducing a new crypto regulation framework. As global countries are tightening their grip on crypto taxation, India is also joining the rally, possibly mandating a reporting framework from April 1.
The Income Tax Department is reportedly expanding its visibility into digital asset holdings in an attempt to mitigate growing tax evasion incidents. With this move, the country is trying to tackle growing concerns of potential tax leakages, data mismatches, and the misuse of crypto platforms for illegal transactions.
Sources familiar with the matter state that the authority is already probing into thousands of similar cases. If the new crypto legislation becomes effective soon, it is poised to mark a major shift in India’s approach to digital assets.
Crypto Regulation: India Plans to Track Transactions
Today’s Hindustan Times report on Indian crypto regulation revealed the country’s strategic move to tackle growing tax evasion crimes. The country is launching new rules to mandate third-party reporting of crypto transactions, possibly effective from April 1, 2026.
According to the report, the government has already identified about 4,500 suspicious cases. These cases, linked to cryptocurrencies, are currently under scrutiny, with the Income Tax Department reviewing them. The authority noted, “Through its e-verification process, the Income-Tax Department has found data mismatch in more than 4,500 cases involving VDA transactions and is investigating discrepancies.”
In India, cryptocurrencies are often dealt with caution. They are not considered a legal currency in the country, but rather a virtual digital asset (VDA). While they are also seen as anonymous and borderless, India’s taxation authorities can keep a record of transactions made through domestic exchanges. This is due to the rules that mandate exchanges to report VDA-related activity in income-tax returns (ITRs). Users are also required to disclose details when they buy or sell digital assets in the country.
On Wednesday, during a parliamentary standing committee on finance, the tax department drew the government’s attention to the growing tax evasion crimes in India. The Department also highlighted the need for a stringent and comprehensive crypto regulation framework to mitigate the risks associated with digital assets.
New Provision Focuses on Crypto Tax
As highlighted by the report, the ITD has added a new provision to the Income-Tax Act- Section 285BAA. This new addition is to make sure that third parties, such as banks and exchanges, do not fail to report VDA transactions to the government. The Central Board of Direct Taxes (CBDT) is currently working on framing the rules. Upon completion, the new set is expected to become effective on April 1. The government is likely to release an official announcement on the matter soon.
Currently, the country imposes a massive 30% tax on crypto gains. Although this unclear crypto regulation and heavy tax policy remain a major barrier for Indian investors, they actively accumulate and invest in digital assets. This is clearly visible from a recent report that highlighted the surge in crypto SIPs in India.
As more users embrace cryptocurrencies, the country finds it challenging to establish an effective crypto tax legislation. Finance Minister Nirmala Sitharaman previously noted, “There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”
