Indian Parliament Raises Fresh Concerns Over Crypto Sector
India’s crypto market has once again come under heavy regulatory scrutiny after a Parliamentary Standing Committee on Finance reportedly flagged the country’s virtual digital asset ecosystem as a major risk area.
The high-level discussion included officials from the Revenue Department, Corporate Affairs Ministry, Central Board of Direct Taxes (CBDT), intelligence agencies, and major crypto platforms including Binance, WazirX, and ZebPay.
According to reports, officials warned lawmakers that crypto activity inside India has evolved far beyond speculative trading and now presents broader financial and national security concerns.
Authorities reportedly linked parts of the ecosystem to money laundering, cyber fraud, terror financing, narcotics trafficking, human trafficking, Ponzi schemes, and illegal cross-border fund transfers.
The committee was chaired by BJP MP Bhartruhari Mahtab.
Massive Gap Between Crypto Trading and Tax Reporting
One of the biggest concerns raised during the meeting involved the growing mismatch between crypto trading activity and tax disclosures.
Officials reportedly revealed that nearly 645,000 individuals were subjected to tax deducted at source (TDS) requirements on crypto transactions during the FY23 financial year.
However, only around 139,000 users actually disclosed crypto-related income while filing tax returns.
That discrepancy has now become a major red flag for both tax authorities and regulators.
India introduced a strict crypto tax regime back in 2022, imposing a flat 30% tax on digital asset gains along with a 1% TDS deduction on transactions.
Despite those aggressive measures, lawmakers reportedly acknowledged that crypto trading activity remains extremely strong across the country.
Officials warned that “thousands of crores” continue flowing into digital assets, with a significant portion of that activity moving toward offshore platforms operating beyond India’s direct regulatory reach.
Enforcement Actions Against Crypto Platforms Are Increasing
India’s enforcement agencies have also significantly intensified pressure on crypto firms over the past year.
The country’s Financial Intelligence Unit of India reportedly initiated 52 separate compliance proceedings under anti-money laundering laws.
Most of those actions targeted offshore crypto companies operating in India without proper registration or compliance procedures.
Authorities imposed penalties totaling roughly ₹29 crore against platforms including Binance, Coinbase, KuCoin, and Bybit.
In addition, regulators blocked 63 URLs and disabled access to 85 crypto-related websites and platforms accused of operating outside India’s legal framework.
The crackdown reflects India’s growing focus on controlling capital flows and tightening oversight around digital asset transactions.
Crypto Tax Revenue Continues Rising
Even with tighter regulation and higher taxes, crypto-related revenue collection in India continues climbing sharply.
According to officials, tax revenue tied to virtual digital assets increased from approximately ₹269 crore during AY 2023-24 to ₹437 crore during AY 2024-25.
Meanwhile, TDS collections linked to crypto transactions reportedly surged to ₹364.62 crore.
The numbers suggest that despite harsh taxation policies, retail participation in crypto markets remains substantial.
India has consistently ranked among the world’s largest crypto adoption markets by user activity, especially in peer-to-peer trading and retail participation.
India Studying Global Crypto Regulations
Indian policymakers are now reviewing how other major economies regulate digital assets before deciding on the next phase of domestic oversight.
Officials are reportedly studying frameworks adopted in the United States, European Union, Japan, Brazil, and China.
Authorities are also considering stricter reporting requirements, PAN-linked ownership tracking systems, and standardized valuation rules for digital assets.
The discussions signal that India may soon move toward a far more comprehensive crypto oversight framework rather than relying solely on taxation and enforcement actions.
India Remains Caught Between Adoption and Regulation
India’s relationship with crypto has remained deeply conflicted for years.
On one hand, the country has become one of the world’s fastest-growing digital asset markets with millions of active traders and rising institutional interest.
On the other hand, regulators continue expressing concerns over financial stability, illicit finance, consumer protection, and uncontrolled offshore trading activity.
The latest parliamentary discussions suggest that India’s government is preparing for another major phase of crypto regulation as authorities attempt to balance innovation with tighter financial control.
