New Delhi: India is planning to further tighten regulations around cryptocurrency transactions and may make third-party reporting mandatory from April 1, 2026, according to officials familiar with the matter. The move is aimed at improving oversight of virtual digital asset (VDA) transactions and strengthening tax compliance.
The Income-Tax Department has already placed more than 4,500 suspected cases involving VDAs under scrutiny. Officials said data mismatches were detected through the department’s e-verification process, prompting investigations into discrepancies in reported crypto transactions.
According to a presentation made by the Central Board of Direct Taxes (CBDT) to the Standing Committee on Finance, inconsistencies were found between disclosures made by taxpayers and data available with the department. While cryptocurrencies are anonymous and borderless by nature, authorities continue to track transactions routed through domestically located exchanges, which are required to disclose VDA-related details in income-tax returns.
To ensure comprehensive reporting, the government has inserted a new provision—Section 285BAA—into the Income-Tax Act. This provision empowers the authorities to mandate third parties such as banks and crypto exchanges to report all VDA transactions. CBDT is currently framing the rules, which are expected to be notified soon and enforced from April 1, 2026.
Although VDAs remain unregulated in India, they fall under both direct and indirect tax regimes. Income from crypto transfers is taxed at 30%, and transactions attract Goods and Services Tax (GST). Additionally, a tax deducted at source (TDS) mechanism was introduced to capture transaction-level details.
While domestic virtual asset service providers (VASPs) are largely complying with TDS norms, overseas platforms serving Indian users are under increased scrutiny for non-compliance. As of November 2025, 47 VASPs were registered with the Financial Intelligence Unit (FIU-IND). Authorities have also taken action against around 18 crypto exchanges for alleged GST evasion amounting to over ₹824 crore.
The government has also used its NUDGE (Non-Intrusive Usage of Data to Guide and Enable) campaign to send more than 44,000 alerts to taxpayers who invested or traded in VDAs without reporting them in their income-tax returns.
Under the Prevention of Money Laundering Act (PMLA), FIU-IND is empowered to regulate VASPs to prevent money laundering and terror financing. Both domestic and foreign crypto platforms catering to Indian users are required to register with the agency.