India is intensifying tax enforcement on past crypto transactions, issuing official notices that demand detailed disclosures and warn of penalties for previously undeclared digital assets.
India Ramps up Tax Enforcement on Past Crypto Deals and Undeclared Assets
India’s tightening tax scrutiny has placed crypto investors under the spotlight as regulators expand enforcement on undisclosed digital asset activity. Koinx, a leading crypto tax software provider, stated on social media platform X on Aug. 25 that the Income Tax Department has begun issuing notices to individuals who failed to disclose earlier virtual digital asset transactions. The firm warned investors:
Think your old crypto trades are safe because you haven’t received a notice yet? The IT Department is now sending Section 133(6) notices for past undisclosed trades. And yes, even trades from years ago can come back to haunt you.
A notice shared online shows that authorities are requesting comprehensive data for the 2022–23 financial year, including buy and sell dates, unsold holdings, and linked bank accounts.
The company explained that these notices can arise from several factors, such as tax deducted at source (TDS) without proper return filings, mismatches in Form 26AS or the Annual Information Statement, undeclared trades on centralized, decentralized, or foreign exchanges, and invalid deductions.
Koinx underscored the risks of ignoring such notices, stating:
If you ignore a 133(6) notice? You’re looking at daily penalties, possible reassessments, heavy fines up to 200% of the tax avoided… and in extreme cases, even prosecution. Silence isn’t protection; it’s an invitation for more trouble.
Each notice, it added, requires a tailored response, and inaction could escalate financial and legal consequences.
Looking ahead, Koinx advised taxpayers to maintain complete records of their crypto transactions, ensure all wallets and exchange accounts are disclosed in income tax returns, and track any discrepancies in official filings. The firm noted that manually calculating crypto taxes is highly challenging and pointed to its software’s capability to integrate with over 800 exchanges and wallets to produce IT-compliant reports. While the crackdown reflects stronger oversight, crypto advocates argue that clearer regulatory frameworks could reduce uncertainty and foster responsible participation in the digital asset market.
