Indian tax authorities have launched an investigation into over 400 high-net-worth traders using Binance, suspecting large-scale crypto tax evasion, according to a report from The Economic Times.
Key Takeaways:
India’s tax authority is investigating over 400 Binance traders for allegedly evading the country’s steep crypto taxes. The probe focuses on activity from 2022 to 2025 and includes scrutiny of peer-to-peer trades. Binance, previously banned and later reinstated after paying a fine, now faces heightened regulatory pressure.The probe, led by the Central Board of Direct Taxes (CBDT), targets activity between 2022-23 and 2024-25 and instructs regional offices to submit findings by October 17.
India’s Crypto Tax Burden Reaches 42.7% for Top Earners, Probe Targets Evasion
The traders under scrutiny allegedly avoided paying India’s steep crypto taxes, which include a 1% withholding tax on every transaction and a 30% tax on profits.
When combined with surcharges and a 4% cess, the effective rate can reach 42.7% for top earners.
The government has maintained its tough stance on digital assets, with Union Minister Piyush Goyal recently reaffirming India’s commitment to expanding its central bank digital currency (CBDC) while continuing to heavily tax private cryptocurrencies.
Binance was banned from operating in India in late 2023, along with eight other offshore exchanges, after the Financial Intelligence Unit (FIU) accused them of violating the Prevention of Money Laundering Act.
The company later paid a $2.25 million fine and re-entered the Indian market in August 2024 after registering as a “reporting entity,” a move that reportedly enabled authorities to access data for the ongoing tax probe.
Investigators are also looking into peer-to-peer (P2P) transactions carried out through Binance that were settled using local bank accounts, Google Pay, or cash, the report said.
While cash settlements have since been discontinued, authorities believe these methods may have been used to conceal taxable income.
The investigation adds to the growing regulatory challenges facing Binance, which is also handling fallout from token depegs and system failures in other markets.
The exchange recently pledged to compensate affected traders, as the broader crypto industry continues to grapple with record liquidations and increased government scrutiny worldwide.
14 Sentenced to Life in India for Kidnapping Crypto Investor
In August, an Indian anti-corruption court sentenced 14 men, including 11 serving and former police officers and ex-legislator Nalin Kotadiya, to life imprisonment for the 2018 kidnapping and extortion of businessman Shailesh Bhatt over his cryptocurrency holdings.
The group was convicted of kidnapping, conspiracy, and corruption-related offenses by a special court in Ahmedabad.
The case dates back to February 2018, when Bhatt was abducted at gunpoint by men posing as CBI officers and taken to a farmhouse near Gandhinagar.
He was forced to transfer 34 Bitcoin worth around $150,000 at the time. The kidnappers also demanded an additional 176 BTC and ₹32 crore ($3.6 million), though the second ransom attempt failed when the courier grew suspicious.
In the same month, India’s Enforcement Directorate (ED) raided 11 locations across cities, including Delhi, in connection with a global crypto fraud scheme. The crackdown followed FIRs filed by the CBI and Delhi Police.
According to officials, the accused posed as law enforcement or tech support agents to extort money from both Indian and foreign nationals.
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