India Aims to Combat Crypto Tax Evasion Using AI and Data Sharing
India’s taxation authority is intensifying its focus on digital currency enforcement. The Central Board of Direct Taxes (CBDT) has announced that it is leveraging artificial intelligence and utilizing global data-sharing frameworks to identify crypto transactions that have not been disclosed. India’s crypto taxation regulations now have the price floor of international data-sharing systems, making it more difficult to conceal assets in foreign accounts.
AI Takes Center Stage
As per CBDT chairman Ravi Agrawal, the agency processes over 6.5 billion transaction entries through AI technology annually. These systems are created to verify what individuals report against actual activity on cryptocurrency platforms. The objective is clear: identify inconsistencies and catch those who omit information.
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India’s tax department (CBDT) is enhancing oversight on cryptocurrency, online banking, and cloud storage to prevent tax evasion. Beginning April 1, 2026, information from wallets and cloud services can be used as evidence during tax… pic.twitter.com/CXdxV1W21H
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Agrawal clarified that these technologies are applied only during official inquiries. They are not employed randomly. Audits occur specifically during searches, raids, and examinations.
Inconsistencies Result in Immediate Notices
One major area of attention is TDS data. According to Indian tax regulations, exchanges must withhold one percent from every crypto transaction. The agency then matches this against individual tax filings. If there’s a discrepancy exceeding ₹100,000, that individual receives an automated notification.
Since the implementation of the tax structure in 2022, the government has gathered approximately ₹7,000 crore from crypto activities. This figure encompasses both the 30 percent taxation on gains and the 1 percent deducted per transaction.
India Engages in Global Crypto Reporting
India has signed onto an international accord dubbed CARF, which stands for Crypto-Asset Reporting Framework. This enables governments to trading network data seamlessly when crypto platforms host users from various countries. For India, this represents a strategy to address offshore wallets and covert trading activities.
The CBDT considers this a much-needed enhancement. With numerous investors shifting funds internationally, this approach aids in bringing transparency to transactions that were previously difficult to trace.
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Officials Assert Privacy is Maintained
Government representatives emphasized that the administration isn’t accessing wallet-level information without valid reasons. Such access only occurs during authorized tax investigations. The intention is to identify tax evaders without intruding into the accounts of all users unnecessarily.
Some tax experts believe this method effectively balances enforcement with equity. People wish to see crypto regulated responsibly, but they also don’t desire mass surveillance on everyone involved with digital currencies.
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Revenue Numbers Are Accumulating
In its inaugural full year, the crypto tax initiative generated nearly ₹2,700 crore. The subsequent year, it surged to over ₹4,300 crore. Altogether, the current total stands at approximately ₹7,000 crore. Additionally, separate inquiries using similar methodologies have resulted in corrections valued at more than ₹11,000 crore.
Officials are confident that these initial outcomes demonstrate the technology is effective. They are planning to implement additional tools capable of handling even larger datasets with greater efficiency.
A Major Reform Is Approaching
A new income tax legislation is anticipated, with a rollout scheduled for April 2026. In preparation, the CBDT is reinforcing both domestic enforcement and international cooperation. An increasing number of countries are expected to become part of CARF, facilitating more cross-border data as well as reducing opportunities to conceal assets.
Crypto investors in India are likely to experience increased scrutiny moving forward. The regulations are already established. Now the necessary infrastructure is catching up.
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Key Takeaways
- India is deploying AI technologies and global data-sharing networks to identify unreported crypto transactions and enforce tax laws.
- The tax authority examines over 6.5 billion records and sends out reminders when trading platform information does not correlate with submitted tax returns.
- Since 2022, India has garnered ₹7,000 crore via a 1% TDS on crypto transactions along with a 30% profit tax.
- India participates in CARF, a global initiative that monitors cross-border crypto transactions and reveals hidden offshore wallets.
- A revised tax code is slated for release by 2026, featuring enhanced enforcement and greater international collaborative efforts already underway.
The post India Targets Crypto Tax Evasion Through AI and Data Sharing appeared first on 99Bitcoins.
