Indian Tax Agency Probes Binance Traders for Tax Evasion
India’s Central Board of Direct Taxes (CBDT) has reportedly launched a large-scale probe targeting more than 400 wealthy Binance traders suspected of tax evasion between 2022 and 2025, according to official documents shared with regional tax departments. The move marks one of the most aggressive enforcement actions yet against crypto tax offenders in India.
Authorities believe these traders failed to declare or underreported their crypto trading profits while using Binance, the world’s largest cryptocurrency exchange. Departments in multiple Indian cities have been instructed to submit investigation reports by October 17, signaling a coordinated national effort to curb offshore crypto tax evasion.
India’s Crypto Tax Rules Among the World’s Highest
Crypto investors in India face one of the world’s toughest tax regimes. Under current rules, digital asset trades incur a 1% tax deducted at source (TDS) on every transfer, and profits are taxed at 30%, with an additional surcharge and 4% cess. For top-income individuals, the effective tax rate can exceed 42%.
“Many high-net-worth investors attempted to bypass taxes by routing trades through offshore exchanges like Binance,” explained a Mumbai-based tax consultant. “But recent regulatory changes have made those strategies much riskier.”
The Indian government has consistently argued that strict taxation is necessary to discourage speculative crypto trading while it works on developing its own central bank digital currency (CBDC). Union Minister Piyush Goyal recently reaffirmed that private cryptocurrencies will continue to face heavy taxation and strict oversight.
Binance’s Return to India Set the Stage for the Crackdown
Binance was blocked from operating in India in 2023 after the Financial Intelligence Unit (FIU) accused the exchange of violating anti-money laundering regulations. However, it re-entered the market in August 2024, paying a $2.25 million penalty and registering as a “reporting entity” under Indian law.
That registration now enables authorities to access trading records and wallet data to identify potential tax evaders. The current probe also covers peer-to-peer (P2P) transactions processed via domestic bank accounts and digital payment platforms such as Google Pay, which regulators believe were used to circumvent official reporting channels.
Financial experts suggest the probe reflects a broader effort to integrate crypto trading into India’s formal tax system.
“This investigation sends a clear message — offshore doesn’t mean invisible anymore,” said BITX compliance advisor. “Authorities now have the data-sharing frameworks to track every digital transaction, even across borders.”
As Binance cooperates with regulators and crypto adoption in India continues to grow, the country appears to be moving toward stricter but more transparent digital asset oversight, signaling a new phase in the regulation of India’s crypto economy.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.