India: "Difficulty tracking cryptocurrency transactions… high tax-evasion risk"

Indian authorities have stated that cryptocurrencies carry a high risk of tax evasion.

According to Cointelegraph on the 8th (local time), India’s Central Board of Direct Taxes (CBDT) said at a session of the Indian Parliament the previous day (the 7th) that “it is becoming more difficult to detect taxable income due to offshore exchanges, private wallets and decentralized finance (DeFi).” The CBDT added that it is “facing difficulties in reconstructing (cryptocurrency) transaction histories,” and that with multiple jurisdictions involved, “it is virtually impossible to track transactions and identify holders for taxation.”

India applies a flat tax rate of 30% to all income-generating activities related to cryptocurrencies. It also levies a 1% tax deducted at source (TDS) on all cryptocurrency transactions, regardless of whether they are profitable. Cointelegraph reported that “India has officially allowed cryptocurrency trading while applying high tax rates,” but added that “the government’s overall stance on cryptocurrencies remains cautious and divided.”