Govt Earns Rs 437 Crore In Crypto Tax In FY24, Up 63% from Last Year

The government collected Rs 437.4 crore in income tax from crypto transactions during the financial year 2023–24, a sharp increase of 63 per cent over the previous year’s figure of Rs 269 crore, Minister of State for Finance Pankaj Chaudhary told Parliament on Friday, according to a news report by The Indian Express.

The jump in tax mop-up comes two years after India introduced a separate tax regime for virtual digital assets (VDAs) — including cryptocurrencies and non-fungible tokens (NFTs). Since April 1, 2022, all profits from trading or selling VDAs are taxed at a flat 30 per cent. These gains are taxed separately and do not allow any deductions, except for the cost of acquisition. Furthermore, losses from cryptocurrency cannot be deducted from other income, nor can they be carried forward. Read here to know more about how cryptocurrencies are taxed.

In addition to the income tax, a one per cent tax deducted at source (TDS) on all crypto transactions above a certain threshold came into effect from July 2022. The idea behind the TDS was less about revenue generation and more about creating a transaction trail that allows tax authorities to trace and match trading activity.

Government Strengthens Enforcement Of Crypto Taxes  

To strengthen enforcement, the Income Tax Department is relying on data-matching tools and backend analytics. One such tool, called “NUDGE,” flags discrepancies when there is a gap between crypto-related TDS reported by exchanges and the income disclosed in tax returns. If the difference crosses Rs 1 lakh, the taxpayer is sent a reminder to update or clarify their return.

In fact, virtual digital assets have recently been under the tax lens.

“Several cases have been flagged where taxpayers failed to declare crypto income despite TDS having been deducted,” a senior official in the department said, requesting anonymity. “Some high-value transactions are also being examined under anti-money laundering provisions.”

CryptoTax Evasions Flagged 

Though the government hasn’t officially estimated how much tax may have been evaded, the Finance Ministry acknowledged that violations are being noticed and tracked. Investigations into accounts that are non-compliant are going on.

There has been some concern about the safety of Indian crypto exchanges. In June, CoinDCX reported a breach. It resulted in a loss of about Rs 379 crore. A year before that, WazirX suffered a hack that resulted in a loss of Rs 1900 crore of user funds. These incidents have meant the regulator has been expected to heighten scrutiny of this space. With tiger rules, it is evident that crypto is no longer a regulatory grey zone but clearly on the government’s radar.