India’s tax authorities are investigating 400 wealthy Binance traders suspected of evading 42% crypto tax. The exchange is already cooperating with the government.
India is investigating hundreds of Binance traders over suspected crypto tax evasion
India’s Central Board of Direct Taxes has launched a large-scale investigation into over 400 Binance traders suspected of evading taxes on profits from cryptocurrency transactions.
This was reported by The Economic Times, citing an internal circular that requires regional offices to submit reports by October 17.
The investigation covers transactions made between 2022 and 2025, when India has already implemented one of the world’s strictest crypto tax regimes.
Tax up to 42.7% on crypto profits
Crypto traders in India are required to pay:
- 1% TDS (withholding tax) on each transaction;
- 30% income tax;
- 4% additional fee (cess) and a top-bracket surcharge.
Together, the effective rate can reach 42.7%, making crypto trading almost unprofitable for large investors.
Commerce Minister Piyush Goyal recently confirmed that the government has no plans to reduce the tax burden, instead focusing on the development of a state-owned digital currency (CBDC).
Binance is already under the sights of the authorities
The Binance exchange was blocked in India at the end of 2023, along with eight other platforms, after the Financial Intelligence Unit (FIU) accused it of operating without a license and violating the Prevention of Money Laundering Act (PMLA).
After paying a $2.25 million fine, Binance returned to the market in August 2024, registering as a “reporting entity” — this gave the government access to data on traders’ transactions.
It was this registration, according to sources, that “opened the way” to the current tax investigation.
P2P transactions under special control
Separately, regulators are checking peer-to-peer transactions that were carried out through Binance, but were settled in rupees through bank accounts, Google Pay or cash (the latter option was later banned).
Such transactions could be used to evade taxes and circumvent reporting, sources in the Ministry of Finance noted.
Context: Binance under pressure around the world
In parallel, the exchange is facing the consequences of mass liquidations of $20 billion, which occurred due to the “flash crash” and the default of the USDe stablecoin on Binance.
The company has promised to compensate users for losses caused by technical failures and incorrect quotes during the market crash.
The Indian investigation could be the largest-scale investigation of crypto traders in the country’s history, and Binance is the first global exchange to be forced to cooperate with Indian tax authorities on such a scale.
Related: Crypto Taxes & Reporting: What Every Investor Should Know Before Year-End
