India Cracks Down on Crypto: 400+ Wealthy Traders Under Investigation for $42M Tax Evasion

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The post India Cracks Down on Crypto: 400+ Wealthy Traders Under Investigation for $42M Tax Evasion appeared first on Coinpedia Fintech News

The tax departments in India have launched an investigation targeting over 400 wealthy traders.  According to the Economic Times, these individuals allegedly hid their digital assets on Binance and failed to pay the mandatory crypto tax. 

Crypto Tax Evasion in India 

The investigation targeting more than 400 high-net-worth traders marks one of the most aggressive enforcement actions against crypto tax evasion in India. The traders are suspected of evading taxes on trades between 2022-23 and 2024-25 by using Binance’s peer-to-peer (P2P) features to avoid KYC and tax reporting.  

These traders failed to report crypto tax returns for approximately $42 million (₹350 crore). To stop them from causing further damage, the tax departments in various cities have been asked to submit updates on their findings by October 17, 2025. The probe is primarily centered in Gujarat, Maharashtra, and Delhi, investigating unreported crypto tax gains. 

Binance was already going through conflict in India after being banned in 2023 due to non-compliance with the Money Laundering Act. Later in 2024, it resumed operation after paying a $2.25 million penalty and registering with the Financial Intelligence Unit (FIU). 

Crypto Tax in India 

India has one of the toughest crypto tax frameworks in the world. It imposes a flat 30% tax on all gains from crypto with an additional 1% TDA on transfers above ₹10,000. For high-income individuals, a surcharge and a 4% cess are also levied, pushing it to approximately 42.7%. 

According to Mudrex, the department charges 1% interest per month on unpaid crypto tax with an additional penalty for further delay. It also imposes a penalty of ₹1,000 to ₹5,000 on missed tax returns. More intense cases fall under the Black Money Act, which brings penalties of approximately 300% of the tax amount with additional criminal prosecution. 

Despite this knowledge, the traders hoped to escape taxation on their assets. Meanwhile, Binance is helping the administration with its data to trace the alleged 400 traders.