The directorate of enforcement (ED) has attached proceeds of crime worth ₹4,189.89 crore in a series of crypto-linked money laundering investigations and declared one accused as a fugitive economic offender, the government informed the Lok Sabha on Monday. Further, as part of its compliance campaign, the central board of direct taxes (CBDT) has issued 44,057 communications to taxpayers who traded or invested in crypto assets but failed to report such activity in Schedule VDA of their income tax returns (ITRs).
In a written reply, Pankaj Chaudhary, minister of state for finance, says the ED has so far arrested 29 individuals and filed 22 prosecution complaints in cases involving virtual digital assets (VDAs), reflecting an intensified crackdown on illicit financial flows routed through crypto platforms.
Anand Bhadauria, a member of Parliament (MP), has asked whether the government is aware that a large-scale flow of black money is routed through cryptocurrency and the details thereof and the details of action taken by the government to monitor black money in crypto exchanges and to regulate cryptocurrencies in the country.
Mr Chaudhary also disclosed that CBDT has detected ₹888.82 crore in undisclosed income from VDA transactions during search and seizure operations by the income tax department. "As part of its compliance efforts, the CBDT has sent 44,057 communications to taxpayers who traded or invested in crypto assets but failed to report these transactions in Schedule VDA of their ITRs."
Officials are using data analytics tools such as project insight, tax deducted at source (TDS) filings from virtual asset service providers and internal databases to flag discrepancies and initiate appropriate action, including enquiries, e-verification, reassessments and searches, he added.
Responding to a question on the absence of a regulatory framework for crypto assets, the minister reiterated that VDAs remain unregulated in India. He says their borderless nature requires substantial global cooperation to establish uniform taxonomy, standards and safeguards, and therefore any effective regulatory system must be aligned with international consensus.
The minister says the government is aware of repeated instances of tax evasion and unreported income involving crypto transactions. "Bringing VDAs under the ambit of the Prevention of Money Laundering Act has made exchanges and other crypto intermediaries reporting entities, mandating them to submit suspicious and specified transaction reports to the financial intelligence unit (FIU). These reports are subsequently shared with enforcement agencies for further investigation."
Mr Chaudhary added that crypto holdings also fall under other legislations such as the Benami Property Transactions Act and the Black Money (Undisclosed Foreign Income and Assets) Act, which allow prosecution in cases involving benami ownership and undisclosed foreign assets, including crypto. "To strengthen oversight, the government is conducting regular training, workshops and digital forensics programmes for investigators, including specialised short-term courses at the National Forensic Sciences University in Goa, to help trace VDA-linked transactions and enhance enforcement capabilities across agencies," he added.
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