India’s tax department found a massive gap between crypto trading activity and tax reporting. Less than a quarter of the 645,000 people who made crypto transactions in the year ending March 2023 actually reported them on tax returns.
The data, reported Wednesday by Reuters from government documents, also estimates India has about 39 million crypto traders holding over $2.1 billion in crypto as of the end of May.
Offshore exchanges, private wallets, and peer-to-peer trades are making crypto activity harder to track, the tax department warned. These findings add a tax-enforcement angle to India’s long-running debate over digital asset policy. It’s no longer just about the central bank’s financial stability fears — now there’s a real question about lost tax revenue.
India ranked first in Chainalysis’ 2025 Global Crypto Adoption Index, so the gap between activity and reporting is especially stark.
The report comes days after the Reserve Bank of India backed a containment strategy for crypto assets, urging lawmakers to keep banks and financial institutions insulated from cryptocurrencies and privately issued stablecoins. The RBI said prohibition remains a recognized policy option.
India isn’t alone in this struggle. Israel’s voluntary crypto disclosure program also fell short. Launched in August 2025, it only drew 289 disclosure requests — far below the government’s expectations of billions in shekels. Tax experts say the lack of anonymous disclosure options weakened the incentive for crypto holders to come forward.
