July 25, 2025
5 min read
Anthony Clarke
India leverages AI and international data-sharing to detect unreported crypto trades and boost tax compliance.
India Targets Crypto Tax Evasion Through AI and Data Sharing
India’s tax department is intensifying its efforts to enforce crypto tax compliance. The Central Board of Direct Taxes (CBDT) confirmed it is now using artificial intelligence (AI) alongside international data-sharing networks to identify unreported crypto trades. This integration makes it increasingly difficult for taxpayers to hide crypto assets overseas.AI Joins the Hunt
CBDT chairman Ravi Agrawal revealed that the department processes over 6.5 billion transaction records annually using AI systems. These tools cross-verify taxpayer filings against actual activity on crypto exchanges to flag discrepancies and detect omissions.🚨🇮🇳BREAKING: INDIA TO WATCH CRYPTO AND CLOUD STORAGE MORE CLOSELY
India’s tax department (CBDT) is stepping up checks on crypto, online banking, and cloud storage to stop tax evasion. Starting April 1, 2026, data from wallets and cloud accounts can be used as proof during tax investigations.Agrawal emphasized that AI tools are deployed only during formal investigations such as searches, raids, and surveys—not for indiscriminate scanning.
Discrepancies Lead to Instant Notices
A key focus is on Tax Deducted at Source (TDS) data. Indian law mandates exchanges to deduct 1% TDS on every crypto transaction. The tax department compares this data with individual tax returns, and if discrepancies exceed ₹100,000, automated notices are issued. Since the crypto tax framework’s introduction in 2022, the government has collected approximately ₹7,000 crore from crypto-related taxes, including the 30% tax on profits and the 1% TDS.India Taps Global Crypto Reporting
India participates in the Crypto-Asset Reporting Framework (CARF), an international agreement enabling automatic data exchange between countries regarding crypto holdings and transactions. CARF helps close gaps on offshore wallets and hidden trading activities. CBDT views this cooperation as a critical upgrade, increasing transparency for cross-border crypto transactions.Officials Say Privacy is Still Respected
Authorities clarified that wallet-level data is accessed only during official tax raids, ensuring privacy is maintained otherwise. This approach aims to balance effective enforcement with taxpayer fairness, avoiding blanket surveillance.Collection Numbers Are Already Piling Up
In its first full year, the crypto tax regime generated nearly ₹2,700 crore, rising to over ₹4,300 crore the following year. Combined, collections total about ₹7,000 crore. Additionally, related investigations using similar AI tools have resulted in corrections exceeding ₹11,000 crore. Officials consider these results proof of the technology’s effectiveness and are expanding capabilities to handle larger datasets efficiently.A Bigger Overhaul Is Coming
A new income tax code is planned for rollout by April 2026. Ahead of this, CBDT is intensifying domestic enforcement and international collaboration. More countries are expected to join CARF, further limiting avenues for hiding crypto assets. Crypto traders in India should anticipate tighter scrutiny as enforcement infrastructure continues to improve.Key Takeaways
- India uses AI and global data-sharing to detect undeclared crypto trades and enforce tax laws.
- Over 6.5 billion transaction records are scanned annually to identify mismatches between exchange data and tax filings.
- Since 2022, ₹7,000 crore has been collected via a 1% TDS on trades and a 30% tax on profits.
- Participation in CARF enables India to track cross-border crypto activity and uncover offshore holdings.
- A new tax code launching in 2026 will bring stricter enforcement and enhanced international cooperation.
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