{"id":85441,"date":"2026-04-08T10:23:20","date_gmt":"2026-04-08T10:23:20","guid":{"rendered":"https:\/\/mudrex.com\/learn\/?p=85441"},"modified":"2026-04-08T10:23:23","modified_gmt":"2026-04-08T10:23:23","slug":"india-crypto-tax-notices-fy-2021-22-section-148a","status":"publish","type":"post","link":"https:\/\/mudrex.com\/learn\/india-crypto-tax-notices-fy-2021-22-section-148a\/","title":{"rendered":"India Crypto Tax Notices FY 2021-22: What Section 148A Means for Traders"},"content":{"rendered":"\n<h1 class=\"wp-block-heading\">India Crypto Tax Notices FY 2021-22: What Section 148A Means for Traders<\/h1>\n\n\n\n<h3 class=\"wp-block-heading\">TL;DR:<\/h3>\n\n\n\n<ul>\n<li>The Indian Income Tax Department is sending <strong>Section 148A notices<\/strong> to those <strong>who traded crypto in FY 2021-22.<\/strong><\/li>\n\n\n\n<li>This is because it was a <strong>period before India introduced its formal crypto tax framework.<\/strong> <\/li>\n\n\n\n<li>Investors have no reason to fret or worry; the <strong>process is easily resolved<\/strong> with due paperwork.<\/li>\n<\/ul>\n\n\n\n<p><strong>India\u2019s Income Tax Department is<\/strong> <strong>sending Section 148A notices to people who traded crypto during FY 2021-22. <\/strong>The notices are being issued to individuals who bought, sold, or held assets such as <a href=\"https:\/\/mudrex.com\/buy-bitcoin\">Bitcoin [BTC]<\/a>, <a href=\"https:\/\/mudrex.com\/buy-ethereum\" data-type=\"link\" data-id=\"https:\/\/mudrex.com\/buy-ethereum\" target=\"_blank\" rel=\"noreferrer noopener\">Ethereum [ETH],<\/a> or any <a href=\"https:\/\/mudrex.com\/all-cryptocurrencies\" data-type=\"link\" data-id=\"https:\/\/mudrex.com\/all-cryptocurrencies\">other crypto<\/a> during that period, and they are being asked to explain possible unreported income.<\/p>\n\n\n\n<p>This has caused concern across the crypto community because the scrutiny is not limited to large investors alone. <strong>Even people with relatively small profits are being flagged.<\/strong> <\/p>\n\n\n\n<p>In many cases, the department is <strong>looking at total buying and selling volumes rather than actual net gains,<\/strong> which means <strong>small investors<\/strong> can also come <strong>under review if the transaction data appears inconsistent with what was reported.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What the Section 148A Notices Mean<\/h3>\n\n\n\n<p>A Section 148A notice is <strong>a show-cause notice<\/strong> issued when the tax department believes <strong>income may have escaped assessment.<\/strong> The notice asks the taxpayer to <strong>explain the transactions<\/strong> or the reporting gap, usually within a response window of 7 to 30 days.<\/p>\n\n\n\n<p>If the explanation is not considered satisfactory, the department can reopen the assessment for FY 2021-22. That can lead to additional tax liabilities, along with interest and penalties. <\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe title=\"Crypto Future Tax in India: What Traders and Investors Need to Know\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/uIEI5MInbqU?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Why FY 2021-22 Is Under Scrutiny<\/h3>\n\n\n\n<p>This is because it was a <strong>period before India introduced its formal crypto tax framework.<\/strong> Before April 1, 2022, crypto gains were taxed under general tax principles, usually as business income or capital gains. At that time, there was <strong>no flat 30% tax on crypto gains,<\/strong> <strong>no dedicated reporting category, and no 1% TDS mechanism.<\/strong><\/p>\n\n\n\n<p>That lack of a clear structure led to inconsistent reporting. Some people may have underreported their gains, while others may have misclassified their activity altogether. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How Authorities Are Tracking Crypto Activity<\/h3>\n\n\n\n<p>The Income Tax Department is using automated systems such as<strong> the Insight Portal and CRIU<\/strong> to match PAN-linked information across multiple channels. This includes <strong>KYC details submitted to crypto exchanges, bank transaction records, trading volumes reported by platforms, and the income tax returns filed by individuals.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Data Sources Being Matched<\/h3>\n\n\n\n<p>The tracking process relies on a combination of records, including:<\/p>\n\n\n\n<ul>\n<li>KYC information provided to crypto exchanges<\/li>\n\n\n\n<li>Bank transaction data<\/li>\n\n\n\n<li>Trading volume information reported by platforms<\/li>\n\n\n\n<li>Filed Income Tax Returns<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Why Small Investors Are Also Being Flagged<\/h3>\n\n\n\n<p><strong>One of the key concerns is that the system may flag total transaction volume as potential income rather than actual profit<\/strong>. That creates risk for smaller investors or active traders whose turnover looks large on paper but whose actual profit is much lower.<\/p>\n\n\n\n<p>For example, a trader with annual turnover of \u20b91.6 crore but only \u20b94-5 lakh in profit. Even in such a case, the full transaction amount may cause scrutiny. This explains why notices are not limited to people who made very large gains. A person can be flagged simply because the trading activity reflected in exchange and bank data does not align clearly with what appears in tax filings.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Who Is Receiving These Notices<\/h3>\n\n\n\n<p>Notices are mainly targeting traders and <strong>investors who were active during FY 2021\u201322.<\/strong> This includes people who reported high trading volumes on domestic or international exchanges, those who did not file income tax returns, and those who may have underreported crypto transactions.<\/p>\n\n\n\n<p>Individuals using multiple exchanges or wallets are also more exposed to reporting gaps. The more fragmented the activity, the harder it may have been to report it consistently. Even non-filers for Assessment Year 2022-23 are being flagged. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The Role of Domestic and International Exchanges<\/h3>\n\n\n\n<p>This scrutiny is not limited to one type of platform. <strong>If someone traded on Indian exchanges such as <a href=\"https:\/\/mudrex.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Mudrex<\/a>, or on international platforms, they could still receive a notice.<\/strong> The central issue is not where the trade took place, but whether the activity can be connected to the taxpayer through exchange records, PAN-linked data, KYC, and bank trails.<\/p>\n\n\n\n<p>Traders cannot assume that activity on foreign platforms sits outside the view of tax authorities if linked records exist elsewhere.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">India\u2019s Crypto Tax Environment<\/h3>\n\n\n\n<p>The current enforcement is in line with India\u2019s crypto tax framework. <strong>Since FY 2022\u201323, gains from VDAs have been taxed at a flat 30% under Section 115BBH, along with surcharge and 4% cess.<\/strong> For top earners, the effective rate can go significantly higher.<\/p>\n\n\n\n<p><strong>In addition, the rules do not allow broad loss adjustments, and a 1% TDS applies to most transactions. <\/strong>This has changed trading behavior, with substantial volume moving to offshore platforms. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">A Wider Compliance Push<\/h3>\n\n\n\n<p>The government has already issued over 44,000 notices related to undisclosed crypto income and has recovered substantial amounts. The latest Section 148A notices are part of a continuing effort rather than an isolated action.<\/p>\n\n\n\n<p>New rules effective April 1, 2026, add to the story. These include daily penalties of \u20b9200 and fines of up to \u20b950,000 for inaccurate reporting by crypto platforms. <\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p>Explore detailed crypto investing guides on\u00a0<a href=\"https:\/\/mudrex.com\/learn\/\" target=\"_blank\" rel=\"noreferrer noopener\">Mudrex Learn<\/a>. Subscribe to the\u00a0<a href=\"https:\/\/www.youtube.com\/@Mudrex\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Mudrex YouTube channel\u00a0<\/a>for crypto fundamentals, risk management strategies, and market updates.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>India Crypto Tax Notices FY 2021-22: What Section 148A Means for Traders TL;DR: India\u2019s Income Tax Department is sending Section 148A notices to people who traded crypto during FY 2021-22. The notices are being issued to individuals who bought, sold, or held assets such as Bitcoin [BTC], Ethereum [ETH], or any other crypto during that [&hellip;]<\/p>\n","protected":false},"author":23,"featured_media":85442,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_import_markdown_pro_load_document_selector":0,"_import_markdown_pro_submit_text_textarea":"","footnotes":""},"categories":[53],"tags":[517,72,793,780,519,520,788,792],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>India Crypto Tax Notices FY 2021-22: What Section 148A Means for Traders - Mudrex Learn<\/title>\n<meta name=\"description\" content=\"India crypto tax notices FY 2021-22: Overview, how your activity is tracked, and what you need to know about the Indian crypto enviroment.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mudrex.com\/learn\/india-crypto-tax-notices-fy-2021-22-section-148a\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"India Crypto Tax Notices FY 2021-22: What Section 148A Means for Traders - 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