Indian tax officials have renewed concerns over cryptocurrency activity, warning that the growing use of digital assets could undermine the country’s ability to enforce tax rules effectively. Key Takeaways: Indian tax authorities warn that crypto transactions are making income tracking and enforcement more difficult. Offshore exchanges, private wallets, and DeFi tools are cited as major obstacles to effective oversight. Despite strict taxes and rising adoption, regulators say gaps remain in cross-border information sharing. The caution was raised by the Income Tax Department (ITD), which operates under the Central Board of Direct Taxes, during a recent parliamentary standing committee on finance, according to a report by The Times of India . Officials outlined what they described as structural risks tied to crypto transactions that make income detection and assessment increasingly difficult. Indian Lawmakers Review Crypto Risks in Parliamentary Committee Hearing The warning emerged from a Wednesday meeting of the parliamentary committee that brought together several government bodies, including the Financial Intelligence Unit, the Department of Revenue, and the CBDT. The discussion focused on a report titled A Study on Virtual Digital Assets (VDAs) and Way Forward, which examined the implications of crypto adoption for regulation and oversight. According to officials present, the ITD highlighted how offshore exchanges, private wallets, and decentralized finance tools complicate the tracking of taxable income. Crypto’s ability to move value across borders quickly and, in some cases, anonymously was described as a major challenge for traditional enforcement systems. Officials reportedly warned that “anonymous, borderless and near-instant” transfers allow funds to bypass regulated intermediaries, limiting visibility for tax authorities. The involvement of multiple jurisdictions further weakens oversight, with authorities saying that identifying asset holders and reconstructing transaction chains can become “virtually impossible” when activity spans several countries. India’s Income Tax Department has flagged “serious risks” around crypto in its presentation to the Parliament Finance Committee, aligning with the RBI’s cautious stance. The focus is on anonymity, offshore activity, and tax enforcement. pic.twitter.com/f4CeM1c1pm — BlockchainedIndia (@blockchainedind) January 8, 2026 While the government has taken steps to improve information sharing in recent months, tax officials said gaps remain that inhibit proper assessments, particularly when transactions are routed through offshore platforms. India already applies one of the world’s strictest tax regimes for digital assets. Profits from crypto transactions are taxed at a flat 30%, alongside a 1% tax deducted at source on every transfer, regardless of whether the trade results in a gain or a loss. Despite the heavy tax burden, crypto trading is legal in India, and the country approved the return of Coinbase in 2025. Adoption has continued to rise, with the FIU approving 49 crypto exchanges during the 2024–2025 fiscal year. RBI Warns Stablecoins Could Threaten Financial Stability, Backs CBDCs India’s central bank has cautioned that the rapid growth of privately issued stablecoins could undermine financial stability and weaken trust in money, arguing that central bank digital currencies should take priority. The warning was included in the latest Financial Stability Report from the Reserve Bank of India, reflecting a shared view among the country’s top financial regulators. The RBI said CBDCs preserve the singleness of money and act as the ultimate settlement asset, making them a more reliable foundation for the financial system. By contrast, it described stablecoins as a fast-growing source of risk, particularly during periods of market stress, and urged policymakers to closely assess their impact and tailor responses to local conditions. While global growth in 2025 appeared resilient, supported by government spending, AI investment, and stronger trade, the RBI warned that vulnerabilities are building beneath the surface. Asset prices remain stretched, debt levels are high, and financial institutions are increasingly interconnected. The post Indian Tax Authorities Warn Crypto Transactions Could Hinder Tax Enforcement appeared first on Cryptonews .
