CBDT Detects ₹630 Crore Undisclosed Crypto Income: A Wake-Up Call for VDA Investors
In a significant development, the Central Board of Direct Taxes (CBDT) has detected ₹630 crore worth of undisclosed income from crypto transactions during search and seizure operations and survey actions. This revelation highlights the increasing scrutiny of Virtual Digital Asset (VDA) transactions by the Income Tax Department.
Source: This data was shared by Shri Pankaj Chaudhary, Minister of State for Finance, in a written reply in Parliament.
Nudging Non-Compliant Taxpayers
To promote voluntary compliance, the Income Tax Department has launched the N.U.D.G.E. initiative (Non-Intrusive Usage of Data to Guide and Enable). Under this campaign, over 44,057 emails and messages were sent to taxpayers who had traded or invested in VDAs but did not report the same in Schedule VDA of their Income Tax Returns (ITRs).
The campaign serves as a soft-warning mechanism-reminding taxpayers of their reporting obligations before initiating harsher measures like reassessment, e-verification, or search and seizure.
Taxation of Crypto Under Section 115BBH
From FY 2022–23, the government introduced a new regime for taxing crypto and other virtual digital assets under Section 115BBH of the Income Tax Act, 1961. The provision mandates:
A flat 30% tax on VDA income,
No deduction (except cost of acquisition),
No set-off of losses from other income.
According to the data shared in Parliament, taxpayers voluntarily declared ₹705 crore in VDA tax across FY 2022–23 and 2023-24. However, enforcement actions uncovered an additional ₹630 crore in undisclosed VDA-related income.
Data Analytics and Surveillance in Action
To identify evasion and discrepancies, the Department is using advanced analytical tools including:
Non-Filer Monitoring System (NMS)
Project Insight
Data from Virtual Asset Service Providers (VASPs) and TDS returns
These tools help match reported income with actual transactions and trace taxpayers who under-report or completely miss disclosing their crypto dealings.
Implications for Investors and Traders
The key takeaway is clear: crypto transactions are fully traceable, and ignoring reporting requirements can attract serious consequences.
Income from crypto must be reported in Schedule VDA of the ITR.
Ignorance of law is no excuse – voluntary compliance is expected.
The Department is closely tracking transaction data via exchanges and third-party sources.
Conclusion
The detection of ₹630 crore in unreported crypto income is not just a statistic – it is a signal to all investors and traders in the digital asset space. The belief that crypto is anonymous or outside the tax net is now obsolete. With the government deploying real-time analytics and cross-verification, compliance is no longer optional – it’s essential.
Virtual does not mean invisible – especially to the taxman.
Source: Written reply by Shri Pankaj Chaudhary, Minister of State for Finance, in Parliament (August 2025), regarding income tax evasion in Virtual Digital Asset transactions.
