Indian authorities are now reportedly preparing to investigate 400 Binance traders on grounds of cryptocurrency tax evasion. This development comes after Binance returns to the Asian market, where it registered itself as a “reporting entity.”
Indian tax department targets evasion among wealthy Binance traders
According to A Latest report By local media, The Economic Times, the Income Tax Department of India’s Central Board of Direct Taxes (CBDT) has been ordered to investigate 400 high-net-worth individuals for concealing their crypto trades on the Binance exchange.
These traders are suspected of evading taxes on their cryptocurrency earnings between 2022-23 and 2024-25, while also refusing to disclose their investments in various exchange wallets outside the country. In India, there is a 1% tax on each cryptocurrency sale, followed by a total tax of 33% to 38% on each profit, along with a 4% duty that can push the effective tax rate to around 42.7%.
Wealthy traders in India have long relied on foreign exchanges like Binance to evade the country’s strict cryptocurrency tax regime, a strategy that has now backfired amid recent enforcement actions. According to The Economic Times, many of these transactions were facilitated by transferring USDT, a stablecoin, to Binance accounts, or via traditional banking channels under the Reserve Bank of India’s Liberal Remittance Programme.
Binance was banned in India in 2023 after the country’s Financial Intelligence Unit (FIU) reported that the exchange failed to comply with anti-money laundering (AML) regulations. However, in August 2024, Binance resolved the issue by meeting all regulatory requirements, paying a $2 million fine, and registering as a reporting entity with the Financial Intelligence Unit. This arrangement enabled the exchange to share user information with Indian authorities, a move that has now paved the way for the ongoing tax investigation.
In addition to assessing trading profits, ITD will also evaluate peer-to-peer trading activity on the Binance exchange. according to Data from StatistaThe cryptocurrency market in India remains vibrant, with revenues expected to reach $9.7 billion in 2025.
While the Asian country may be crypto-friendly as digital assets are recognized investments, there is also a lot of regulatory caution in light of protecting the interests of consumers. For example, the Bombay Stock Exchange recently rejected the public listing of a company due to intentions to invest in cryptocurrencies using high capital.
Crypto market overview
At the time of writing, the total value of the cryptocurrency market is $3.68 trillion, representing a slight rebound of 1.67% in the last day. Meanwhile, total daily trading volume increased by 32.40% to $400.72 billion.
Featured image from Flickr, chart from Tradingview
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