Union Finance Ministry told the Rajya Sabha on Tuesday that the Income Tax Department has sent over 44,000 emails and messages to taxpayers who failed to disclose crypto transactions in their returns.
It also stated that a demand for more than ₹33,000 crore has been raised under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
While crypto currency is neither legal nor illegal in India, transactions and earnings from it are taxed as virtual digital assets (VDA). The term VDA also includes non-fungible tokens (NFTs) and other notified digital assets.
Gains from VDAs are subject to a 30 per cent tax, along with any applicable surcharge and a 4 per cent cess.
Additionally, a 1 per cent TDS must be deducted from any payment made to a resident for the transfer of a VDA. Taxpayers can disclose their VDA income transaction-wise in the new ‘schedule VDA’ in ITR-2 and ITR-3.
The government began taxing VDAs in fiscal year 2022-23. In a written response, Minister of State in the Finance Ministry, Pankaj Chaudhary, confirmed that the Central Board of Direct Taxes (CBDT) has detected multiple instances of tax evasion related to cryptocurrency and VDA investments and has taken the necessary legal action.
Whenever tax evasion is detected, the I-T Department takes action, including nudging taxpayers, e-verification, reassessment, surveys, or search and seizure operations.
“To create awareness among taxpayers regarding the disclosure of VDA and payment of tax, CBDT has recently launched the NUDGE (Non-Intrusive Usage of Data to Guide and Enable) taxpayers campaign, under which 44,057 emails and messages have been sent to select taxpayers who invested and traded in VDAs but did not report these transactions in schedule VDA of their Income Tax Returns (ITRs),” he said.
Chaudhary also reported that the total tax offered by taxpayers for the fiscal years 2022-23 and 2023-24 was ₹705 crore. Furthermore, he noted that “during search and seizure operations and survey operations, undisclosed income detected in VDA transactions amounts to approximately ₹630 crore.”
The Black Money Act
In response to a separate question, Chaudhary clarified that neither the Income Tax Act nor the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act use the term ‘black money’.
However, based on information about undisclosed foreign assets, the I-T Department has completed 1,021 assessments as of March 31, 2025. This has resulted in a tax and penalty demand of approximately ₹35,105 crore, and 163 prosecution complaints have been filed.
“The tax demand becomes finalised when appeals, if any, preferred before the CIT(A), ITAT, High Court, and Supreme Court are decided,” the Minister stated.
He added that between July 1, 2015, and March 31, 2025, a recovery of ₹338 crore has been made against tax, penalty, and interest demands raised under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act.
Previously, during a one-time three-month compliance window from July 1 to September 30, 2015, under the same Act, 684 disclosures were made involving undisclosed foreign assets worth ₹4,164 crore.
“The amount collected by way of tax and penalty in such cases was about ₹2,476 crore,” Chaudhary said.
