Indian tax authorities are probing more than 400 high-net-worth individuals for allegedly evading taxes on cryptocurrency trades conducted through Binance, the world's largest crypto exchange. The investigation, reported by The Economic Times, covers transactions from fiscal years 2022–23 to 2024–25, with the Central Board of Direct Taxes (CBDT) instructing regional offices to submit progress reports by October 17, 2025.
India imposes some of the highest crypto tax rates globally, with profits taxed at up to 42.7% for top-bracket individuals. This includes a 30% flat tax on gains, a surcharge, and a 4% cess, along with a 1% tax deducted at source (TDS) on every crypto transfer, credited against final liabilities. The government's stance aims to deter speculative activity in non-sovereign digital assets.
The probe focuses on whether traders used Binance's offshore platform to avoid Indian tax reporting, with authorities analyzing blockchain transaction data, peer-to-peer (P2P) records, and linked domestic payment accounts like bank transfers, Google Pay, and previously cash settlements. Binance, which was blocked in India in late 2023 for operating without registration under anti-money laundering laws, re-entered the market in August 2024 after paying a $2.25 million penalty and registering with the Financial Intelligence Unit (FIU), granting regulators greater data access.
This enforcement highlights India's tightening grip on crypto compliance, with the government emphasizing its strict tax policy and promotion of a central bank digital currency (CBDC). Since the 30% tax was introduced in 2022, local trading volumes have fallen sharply, and exchanges have shifted to compliance-driven services. Traders face potential penalties, including reassessment, scrutiny, and prosecution under laws like the Black Money Act for non-disclosure.