India Uncovers $104M in Unreported Crypto Income, Sends 44,000 "Dear Taxpayer" Letters 📬

India's Income Tax Department has identified more than Rs 888 crore (approximately $104 million) in unreported income linked to virtual digital asset (VDA) activity, according to a report from The Economic Times. As part of an expanded enforcement push, the agency has issued over 44,000 notices to taxpayers connected to crypto transactions, signaling a more aggressive stance as the 2026 filing season gets underway.

The crackdown coincides with the April 1, 2026 effective date of India's new Income Tax Act, 2025, which replaced the 1961 legislation. The core crypto tax framework remains unchanged for fiscal year FY25-26, with profits from crypto trades still taxed at a flat 30% and eligible transfers subject to a 1% tax deducted at source (TDS). What has shifted is the granularity of reporting now required under Schedule VDA.

Under the updated rules, taxpayers must disclose transaction-level information for each trading, token swap, transfer, and disposal event, rather than only reporting overall gains. The Income Tax Department has directed crypto exchanges operating in India to submit detailed user data to support these disclosures.

The new compliance regime applies across the broader VDA category, which covers cryptocurrencies, non-fungible tokens, and other tokenized digital records defined under Indian law. Officials have stated that the expanded data-sharing requirements are intended to close persistent gaps between on-chain activity and reported taxable income.

For India's crypto sector, the immediate effect has been a sharp rise in direct engagement between tax authorities and individual investors, with tens of thousands of notices already dispatched in the early weeks of the new act's enforcement.