According to ChainCatcher, with stricter tax enforcement in India, crypto asset investors face stricter reporting and compliance requirements in the 2026 tax season, with incorrect reporting potentially triggering fines and audits. The report points out that under current rules, crypto asset gains are still subject to a 30% uniform capital gains tax, and a 1% tax withholding tax (TDS) is levied on transactions exceeding a certain amount. Losses cannot be deducted across assets. The new Income Tax Act (2025) came into effect on April 1, 2026, but the core tax framework remains largely unchanged.
At the reporting level, investors are required to complete a dedicated Schedule VDA section in ITR-2 or ITR-3 forms, and are required to record each transaction individually, including all operations such as trading, exchanging, transferring, and clearing, not just summarizing profits. The report emphasizes that the regulatory focus has clearly escalated. Indian tax authorities will directly obtain user-level transaction data through trading platforms, custodians, and wallet service providers, and automatically cross-check it with reported information; inconsistencies will trigger system flags and reviews.
Data shows that Indian tax authorities have issued over 44,000 notices and discovered approximately 88.8 billion rupees (about US$930 million) in undeclared virtual asset income. Meanwhile, the tax authorities are further enhancing their tracking capabilities by combining on-chain analytics tools with international data sharing mechanisms. Furthermore, starting in 2027, India will align with the OECD's crypto-asset reporting framework to achieve automatic exchange of cross-border transaction data, and overseas exchange holdings will gradually be brought under regulatory scrutiny.
Analysis indicates that common errors include misuse of reporting forms, omission of airdrop and staking income, and incorrect matching of 1% TDS records. The report emphasizes that crypto tax compliance is shifting from "post-event reporting" to "real-time traceability," requiring investors to strengthen year-round record management.
