**Executive Summary:**
This document provides answers to questions raised in Lok Sabha regarding income tax on Virtual Digital Assets (VDA) cryptocurrency income. It details the revenue collected from VDA-related income tax since FY 2022-23, the use of data analytics to identify tax evasion, and capacity-building initiatives for tax officials. Data for FY 2024-25 is not yet available as the due date for filing Income Tax Returns has not elapsed.
**Key Points / Main Content:**
* **Revenue Collection:**
* Tax on VDA income was introduced in FY 2022-23 under Section 115BBH of the Income Tax Act, 1961.
* The tax collected from VDA income via Income Tax Returns:
* FY 2022-23: ₹269.09 crore
* FY 2023-24: ₹437.43 crore
* FY 2024-25: Data not yet available
* **Tax Evasion Detection:**
* The government uses data analytics tools, including the Non-Filer Monitoring System (NMS), Project Insight, and internal databases to detect tax evasion in VDA transactions.
* Analysis correlates VDA transaction data with income tax returns.
* **VDA Transaction Matching:**
* Real-time matching of VDA transactions between income tax returns and Virtual Asset Service Providers (VASPs) is not currently implemented.
* TDS returns from VASPs and income tax returns from taxpayers are analyzed to identify discrepancies.
* The Central Board of Direct Taxes (CBDT) initiated the NUDGE campaign to address discrepancies by communicating with taxpayers.
* **Capacity Building:**
* The government undertakes capacity-building initiatives to equip tax officials for compliance monitoring and investigation of VDA transactions.
* Initiatives include training programs, workshops, Chintan Shivirs, and hands-on workshops.
* Field offices conduct training on digital forensics, blockchain analysis, legal frameworks, and handling digital evidence.
* Short-term training on digital forensics is provided in partnership with the National Forensic Science University (NFSU), Goa.
**Impact Analysis:**
* **Taxpayers:**
* *Impact:* Taxpayers who engage in VDA transactions are subject to income tax under Section 115BBH. They are also subject to potential scrutiny and communication from the Income Tax Department if discrepancies are found between their reported transactions and TDS returns filed by VASPs.
* *Action Required:* Accurately report all VDA-related income in income tax returns. Review and update returns if notified of discrepancies under the NUDGE campaign.
* **Virtual Asset Service Providers (VASPs):**
* *Impact:* VASPs are required to file TDS returns on VDA transactions and are subject to having their data analyzed for discrepancies against taxpayer returns.
* *Action Required:* Ensure accurate and timely filing of TDS returns for VDA transactions.
* **Tax Officials:**
* *Impact:* Tax officials are responsible for monitoring and investigating VDA transactions for tax compliance.
* *Action Required:* Participate in capacity-building initiatives, including training programs and workshops, to enhance skills in digital forensics, blockchain analysis, and handling digital evidence.
Key Entities Referenced
Income Tax Act, 1961: The primary law governing income tax in India, mentioned in relation to section 115BBH regarding tax on Virtual Digital Assets (VDA).
Virtual Digital Assets VDA: A category of digital assets, including cryptocurrency, subject to income tax under section 115BBH of the Income Tax Act, 1961.
Virtual Asset Service Providers VASPs: Entities providing services related to virtual assets, required to file TDS returns and subject to monitoring for discrepancies in VDA transactions.
Section 115BBH: Section of the Income Tax Act, 1961 that pertains to the taxation of income from the transfer of Virtual Digital Assets (VDA).
Central Board of Direct Taxes: The apex body responsible for direct tax administration in India, which initiated the NUDGE campaign.
Non Filer Monitoring System NMS: A data analytics tool used by the Income Tax Department to identify potential tax evasion by monitoring non-filers of income tax returns.
Project Insight: A data analytics project used by the Income Tax Department to detect tax evasion from VDA related transactions.
National Forensic Science University NFSU, Goa: A training institution partnering with the Income Tax Department to provide short-term training on digital forensics to tax officials.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO.13
TO BE ANSWERED ON MONDAY, JULY 21, 2025/ASHADHA 30, 1947(SAKA)
“INCOME TAX ON VDA & CRYPTO CURRENCY INCOME”
13. Shri Lavu Sri Krishna Devarayalu :
Shri G M Harish Balayogi:
Will the Minister of FINANCE be pleased to state:
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 AI/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
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) The tax on income from transfer of Virtual Digital Assets (VDA), under
section 115BBH of the Income Tax Act, 1961, was introduced from FY 2022-23.
The collection of tax on income from VDA, for last three years is as under:
S. No. Financial Year Amount of tax on income from VDA as per
Income Tax Returns (in crore)
1 2022-23 269.09
2 2023-24 437.43
3. 2024-25 Data not yet available*
*Due date for filing Income Tax Returns for FY 2024-25 has not yet elapsed.(b) No such estimates have been made.
(c) The Government is utilizing data analytics tools to trace and detect tax
evasion from VDA related transactions. The analysis includes the use of Non-
Filer Monitoring System (NMS), Project Insight and internal databases of the
Income Tax Department, to correlate available information on VDA transactions
with the transactions disclosed in the return of income by the taxpayer.
(d) Real time matching of VDA related transactions, filed in income tax
returns, with information filed by Virtual Asset Service Providers (VASPs) is not
being carried out. However, TDS returns filed by VASPs and income tax returns
filed by the taxpayers are analysed to identify discrepancies in reported VDA
transactions. Central Board of Direct Taxes has initiated NUDGE (Non-Intrusive
use of Data to Guide and Enable) campaign to identify such discrepancies for
further action. Under NUDGE campaign suitable communications, to review and
update their income tax returns, were issued to all taxpayers who did not report
VDA related transactions in their income tax returns, despite tax being deducted
at source for such transactions by VASPs, where the quantum of such
discrepancy was more than Rs 1 lakh.
(e) Several capacity-building initiatives are being undertaken by the
Government to equip officers for effective compliance monitoring and
investigation of VDA related transactions. Training programs, specialized
workshops, Chintan Shivirs and hands-on workshops are regularly conducted by
various training institutes under the Income Tax Department. At local level, field
offices conduct training sessions and webinars on digital forensics, blockchain
analysis, legal frameworks, and handling of digital evidence. The officers and
officials are also imparted short term training on digital forensics, in partnership
with National Forensic Science University (NFSU), Goa, which empower them to
identify and trace VDA related transactions from data captured during intrusive
actions.
***