India’s Crypto Tax Enforcement Heats Up With Binance Users in the Crosshairs

Indian tax officials have launched a sweeping investigation into over 400 wealthy cryptocurrency traders suspected of dodging the country’s steep crypto taxes while using Binance, the world’s largest exchange.

According to “The Economic Times“, the Central Board of Direct Taxes has instructed regional offices to report on enforcement actions by mid-October, focusing on trades made between 2022 and 2025.

India’s tax framework for digital assets remains one of the toughest globally, imposing a 30% levy on profits and a 1% withholding tax on every transaction. With additional surcharges, the effective rate for high-income individuals can approach 43%. Despite this, many traders are believed to have avoided declaring crypto gains made through offshore platforms.

Binance’s presence in India has been turbulent. The platform was banned in 2023 after regulators accused it of breaching anti–money laundering laws but later regained access in August 2024 by paying a $2.25 million fine and formally registering with India’s Financial Intelligence Unit. That registration reportedly opened the door for the current tax probe, as it enabled authorities to request data directly from the exchange.

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Investigators are now also reviewing Binance’s role in facilitating peer-to-peer crypto transactions that were settled using Indian bank accounts or digital payment apps like Google Pay—methods that may have been used to bypass reporting requirements.

Meanwhile, Binance continues to face pressure abroad, including managing compensation claims from traders affected by recent token depegs and massive liquidations across the crypto market.