The Indian government is intensifying its efforts to combat tax evasion in the cryptocurrency sector through a set of advanced technology and organizational measures. By taking advantage of artificial intelligence (AI), machine learning, and digital forensic medicine, the tax authorities aim to identify suspicious transactions and improve compliance with virtue Digital assets (VDA) tax rules. These initiatives, as well as specialized training programs for tax employees, confirm a strategic batch to close the gaps and enhance revenue collection from coding profits.
Under the Central Council for Direct Taxes (CBDT), tax enforcement agencies have given priority to capacity building, including forensic training on Blockchain that are presented through cooperation with institutions such as the National University of Criminal Sciences in Gaa. These programs focus on preparing officials with experience in treating digital evidence and Blockchain analysis, allowing more effective tracking of VDA transactions. However, the actual time challenges are still identical to the reported encryption transactions data in tax declarations with information from virtual asset service providers (VASPS). Instead, the contradictions are currently being marked by comparing the custom tax returns (TDS) from VASPS with individual tax files [1].
To treat deficiency, CBDT launched a Nudge campaign, targeting taxpayers who have failed to detect VDA transactions that exceed 1 Rs. Communications are sent to these individuals, urging compliance with tax obligations. Meanwhile, legislative frameworks such as section 115BBH of the tax year 2022-23 impose a 30 % flat income tax on encryption profits, not to allow discounts except for the cost of acquisition. 1 % TDS also applies to some transactions. During the fiscal year 2022-23, these measures generated 437 rupees in tax groups of VDA income, which represents a significant increase compared to previous years. [2].
Technology is still essential in implementation. Automated learning tools and automated learning tools are published to discover abnormal cases in transactions patterns, while data analysis platforms such as NMS (NMS) and collection of project information for science contradictions. These systems help mutual reference data from multiple databases, which improves the accuracy of compliance tests. However, the lack of VASP data integration in an actual time highlights the ongoing gaps in the system, especially for cross -border transactions [1].
The government’s efforts also prompted an exchanging global encryption to compatible with Indian regulations. For example, BYBIT, a major international stock exchange, announced the tax and services of 18 % (GST) on the services of Indian users, starting from July 2025. This includes trading fees, fallen rewards, and withdrawal, which reflects a broader transformation towards compliance with local tax states [1].
The mix of technological innovation, organizational accuracy, and international cooperation indicates a decisive shift in India’s approach to imposing encryption taxes. While challenges, such as improving data matching in actual time and processing complications across the border, remains the proactive position of the government as a commitment to transparency and accountability in the area of digital assets. For investors and exchange, the message is clear: tax compliance with encryption transactions is no longer optional [2].
source: [1] [title: Indian Government Deploys Tech to Tackle Crypto Tax Evasion] [url: https://www.livebitcoinnews.com/indian-government-deploys-tech-to-tackle-crypto-tax-evasion/] [2] [title: Indian Government Cracks Down on Crypto Tax Evasion Using AI, Collects ₹437 Crore] [url: https://www.businesstoday.in/personal-finance/tax/story/indian-government-crypto-tax-compliance-ai-data-analytics-virtual-digital-assets-486476-2025-07-26]
