Income Tax: More Than 700 Cr Collected from Crypto Taxation in Last 2 Years

The Ministry of Finance has given answers to a Lok Sabha question asked by Shri Lavu Sri Krishna Devarayalu and Shri G M Harish Balayogi regarding Income Tax on Virtual Digital Asset (VDA) and Crypto Currency Income. The Ministry of Finance has given a detailed response on how crypto-related income is being taxed, monitored, and implemented.

Asked Questions

The following questions were asked to the Ministry of Finance:

“a) the total revenue collected from income tax on VDA/Cryptocurrency related income during the last three years, year-wise;
(b) whether any estimates have been made by the Government regarding the projected revenue loss due to under-reporting/misreporting of income from VDA/cryptocurrency transactions;
(c) whether the Government is using Al/ML/data analytics tools to identify tax evasion in VDA transactions, if so, details thereof;
(d) whether a centralized system has been established by the Government for real-time matching of VDA-related ITR filings with TDS returns filed by Virtual Asset Service Providers (VASPs), if so, the status of its implementation; and
(e) whether the Government has undertaken any capacity-building initiatives to equip tax officials for effective compliance monitoring and investigation in the VDA/cryptocurrency ecosystem, if so, the details thereof and if not, the reasons therefor?”

Answer Given by Ministry of Finance

(a) Tax Collection on income from VDA, for last three years:

• For Financial Year (FY)2022-23, Rs 269.09 Crore tax was collected.
• For FY 2023-24, Rs 437.43 Crore was collected.
• For FY 2024-25, the data is not available as the deadline for filing ITR FY 2024-25 has not over yet.

(b) The government said it has not made estimates of how much projected revenue is lost due to under-reporting or misreporting of income from VDA/cryptocurrency transactions.

(c) To identify the taxpayers who are not paying tax on their income from VDA transactions, the government is taking the help of technology and data tools such as Non-Filer Monitoring System (NMS), Project Insight, and Internal databases. These tools help in matching the information available on the VDA transactions with the information reported in the ITR.

(d) The government has not designed any system for the real-time matching of VDA-related ITRs with TDS returns filed by Virtual Asset Service Providers (VASPs). The Income Tax Department is reviewing mismatches in VDA transactions. To fix these mismatches, the CBDT has started a campaign called NUDGE (Non-Intrusive use of Data to Guide and Enable). It sends alerts to taxpayers asking them to review and update their ITR if there is a difference of more than Rs 1 lakh in disclosed and actual VDA transactions.

(e) The government is training tax officers to understand and monitor VDA-related transactions. This includes conducting:

•  Training programs
• Chintan Shivirs and hands-on workshops
• Training sessions and webinars on digital forensics, blockchain analysis, legal frameworks, and handling digital evidence.