India's Crypto Tax Net Has Holes Big Enough to Drive $2.1B Through 🕳️

India's tax department has identified substantial gaps in crypto tax compliance, according to government documents reviewed by Reuters. Fewer than a quarter of the 645,000 individuals who conducted crypto transactions in the year ending March 2023 reported those trades on their tax returns, the documents showed. The department estimated that India had roughly 39 million crypto traders holding more than $2.1 billion in digital assets at the end of May, with offshore exchanges, private wallets and peer-to-peer (P2P) trades cited as factors complicating enforcement.

The findings land alongside the Reserve Bank of India's July 3 recommendation that lawmakers insulate banks and financial institutions from cryptocurrencies and privately issued stablecoins. The central bank said prohibition remained a recognized policy option and advised against allowing digital assets in payments and settlements. India was ranked first in Chainalysis' 2025 Global Crypto Adoption Index. Cointelegraph sought comment from India's Central Board of Direct Taxes but had not received a response by publication.

India's enforcement challenges mirror a broader global pattern. In Israel, a voluntary disclosure program for crypto profits fell well short of expectations, according to a June 3 report by local business outlet Globes. The Israel Tax Authority (ITA) projected collections of 2 billion to 3 billion Israeli shekels (about $650 million to $986 million) from the initiative, which launched in August 2025 and offered criminal immunity to participants. Only 289 disclosure requests had been filed, with reported capital totaling 676.5 million shekels and estimated tax due of 40.9 million shekels. Tax experts cited by Globes attributed the shortfall to the absence of an anonymous disclosure track.

In South Korea, a petition to scrap the country's crypto tax reached the 50,000-signature threshold required for a formal government response. India, Israel and South Korea together illustrate the persistent difficulty governments face in capturing crypto activity within existing tax frameworks, with jurisdiction-hopping, self-custody and decentralized trading cited as recurring obstacles.