India’s Income Tax Department has begun issuing Section 148A notices regarding cryptocurrency transactions from the 2021-22 financial year. The action involves cross-matching Permanent Account Number (PAN) data, exchange reports, bank details, and filed Income Tax Returns (ITRs) to identify unreported activity. Taxpayers who failed to report crypto gains, did not file an ITR, or used multiple exchanges are being flagged, as data-sharing through the Advanced Information System (AIS) increases traceability.
The tax department of India has initiated the issuance of Section 148A notices concerning cryptocurrency activity from the financial year 2021-22. This move signifies a major step in the country’s evolving approach to crypto asset regulation and tax compliance.
Authorities are matching data from PAN details, crypto exchanges, bank accounts, and filed ITRs to uncover discrepancies. The system flags cases involving unreported transactions or mismatches in declared income.
Failing to report cryptocurrency activity for FY21-22, missing an ITR filing for the assessment year 2022-23, or using several wallets and exchanges are key triggers for these notices. These practices can scatter transaction data, complicating official tracking.
A principal issue is that tax authorities sometimes calculate alleged “undisclosed income” based on total turnover volume rather than net profits. This very fact only exemplifies the need for proper reporting and keeping of records, as stated in the official information.
The use of the Advanced Information System (AIS) and KYC data-sharing between exchanges has rendered crypto transactions more traceable. This increased visibility raises the likelihood of receiving notices for the 2021-22 and subsequent financial years.
As the tax department intensifies its focus, taxpayers must ensure compliance with accurate reporting. The issuance of these notices highlights the ongoing development of crypto regulation within India’s legal framework.
