India’s Income Tax Department is now using artificial intelligence (AI) and data tools to catch people trying to avoid paying taxes on cryptocurrencies. In a recent update to the Parliament, the government revealed that it has collected ₹437 crore in crypto taxes by using AI.
In an interview with Economic Times, Ravi Agrawal, Chairman of the Central Board of Direct Taxes, said that India is using new technologies like machine learning and digital forensics to track suspicious crypto transactions more effectively.
India Tax Authorities Use AI to Detect Tax Evasion
The government admitted that tax authorities are using AI to match deducted at source (TDS) data submitted by crypto exchanges. It shows that India is strengthening its tax compliance measures, and as per the latest reports, the government received a total of Rs 437 crore as taxes on VDA-related income in the financial year 2022-2023 alone.
Additionally, the government has also launched the Crypto-Asset Reporting Framework (CARF) to ensure automated sharing of tax-related information.
“The goal is to place crypto transactions under international tax agreements so there is alignment among the nations,” Saravanan Pandian, CEO and founder of KoinBX, said in an interview with Decrypt.
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With recent crypto regulations development in India, it is clear that the government is emphasizing transparency and accountability in the digital asset space. CA Sonu Jain, chief risk and compliance officer at 9Point Capital, also confirmed the fact that India is intensifying its measures to enhance transparency with new tools and technology.
He said, “India is preparing for a future where wallet visibility and automatic data exchange become routine in an industry long plagued by anonymity.”
Final Thought
In 2025, the Indian government has taken several steps to develop its digital asset space; it has evolved— tax, transparency, consumer protection, asset reporting, and cross-border trading. Now, with the confirmation of AI utility in the tax department, the nation demonstrates its enhanced measures of traceability to curb crypto tax evasion.
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FAQs
India uses AI, machine learning, and data forensics to detect suspicious crypto transactions.
CARF is a new system to automate global tax data sharing on crypto transactions.
Yes, India is enforcing wallet visibility and automatic data exchange for crypto.
