India’s tax authorities have launched a sweeping investigation into more than 400 high‑net‑worth Binance traders suspected of evading the country’s stringent cryptocurrency tax regime, according to new report.
The probe, led by the Central Board of Direct Taxes (CBDT), focuses on activity between 2022 and 2025, with regional tax offices instructed to submit progress reports by October 17. Officials say the traders under scrutiny are believed to have underreported income or bypassed India’s crypto tax structure while using Binance, the world’s largest cryptocurrency exchange by trading volume.
Under India’s current framework, crypto traders face one of the world’s toughest tax burdens. Each digital asset transfer is subject to a 1% Tax Deducted at Source (TDS), which is credited against final liabilities, and a 30% tax on profits, plus surcharge and a 4% cess, which can push the effective rate to around 42.7% for top earners.
Authorities have grown increasingly concerned that Indian users are exploiting offshore exchanges like Binance to avoid these obligations. Investigators are reportedly analyzing transaction trails, fiat on‑ramps, and wallet addresses linked to major accounts.
The probe comes as India tightens oversight of digital assets while accelerating development of its central bank digital currency (CBDC). Union Minister Piyush Goyal recently confirmed that the government intends to expand the digital rupee pilot while maintaining high taxes on non‑sovereign cryptocurrencies.
Regulators say the investigation underscores New Delhi’s dual approach, encouraging blockchain innovation through official channels while imposing strict compliance and fiscal discipline on unregulated crypto activity. If violations are confirmed, experts warn the penalties could include substantial fines, asset seizures, and even criminal proceedings under India’s financial laws.