Many Indians trading on the world’s largest crypto exchange, Binance, have come under the glare of tax authorities. As reported by The Economic Times, the Income Tax (I-T) department has been investigating whether the 1% Tax Deducted at Source (TDS) levied on such transactions has been properly collected.
Over the past few weeks, local investors have received notices from the tax office, requiring them to either provide proof of TDS deduction or submit documentary evidence explaining why TDS is not applicable to their transactions.
Under the 2022 budget provisions, income from cryptocurrencies is taxed at 30%, along with a 1% Tax Deducted at Source (TDS) on transactions. However, many traders have been found neglecting these rules, prompting the department to take action.
Officials are using advanced technologies like data analytics and Non-Filer Monitoring Systems to identify tax evaders. Information is being gathered from social media, emails, and other digital platforms to track those who have hidden their crypto earnings or failed to pay the required taxes. Investigations are also underway to determine if Indian traders have transferred their crypto holdings to foreign platforms to avoid tax obligations.
Vikram Subburaj, founder & CEO of Giottus, told ET, “Well, this was bound to happen sooner or later. Overseas exchanges that bypass the TDS requirements are putting Indian traders in a difficult position. If you want to serve investors in India, you should respect and follow the law of the land.”
With the proposed Income Tax Bill 2025, authorities will have greater access to digital records, making it easier to track crypto investments and transactions. The goal is clear: ensure that all crypto traders pay the taxes owed on their earnings.
