India\'s central bank reiterates its stance on cryptocurrency ban, tax authorities warn of tax eva

The direction of India\'s cryptocurrency policy has attracted attention: the central bank is urging to strengthen control, and the tax department is worried about tax evasion.

According to India\'s internal government documents, the country\'s cryptocurrency policy is still under strict review. Documents show that the Reserve Bank of India (RBI) continues to favor stricter restrictions on private cryptocurrencies, while the income tax department has expressed concerns about tax evasion related to digital asset transactions.

These documents show that despite the increasing adoption of cryptocurrencies around the world, major Indian government agencies remain cautious about their rapid growth. Although India has not yet introduced comprehensive digital asset regulation laws, policymakers have always prioritized financial stability, currency sovereignty and investor protection.

The Central Bank of India advocates tightening restrictions

According to the document, the Reserve Bank of India advises banks and regulated financial institutions to distance themselves from cryptocurrencies and privately issued stablecoins. The central bank believes that broader integration of crypto assets into the financial system may pose risks to monetary policy and financial stability.

It is worth noting that this recommendation is made in the context of a number of major economies moving towards establishing clearer regulatory frameworks for digital assets rather than adopting comprehensive restrictions.

Tax authorities raise compliance concerns

Indian income tax authorities also warned that cryptocurrency transactions through offshore exchanges and private wallets make it difficult to identify asset owners and recover taxes. The document points out that peer-to-peer transactions and cross-border platforms continue to pose challenges to tax enforcement.

document shows that as of May 2026, approximately 39 million Indians held crypto assets worth approximately US$2.1 billion. However, in the fiscal year ending March 2023, less than a quarter of the nearly 645,000 cryptocurrency traders disclosed relevant holdings on their tax returns.

Policy is not yet settled

Although India has levied a 30% tax on cryptocurrency earnings and requires exchanges to comply with registration requirements, the country has not yet finalized a specific legal framework for virtual digital assets. A draft proposal to ban private cryptocurrencies was drafted in 2021 but was never submitted to Parliament for review.

The latest documents show that authorities continue to tend to strengthen regulation rather than expand the adoption of crypto assets. At the same time, the Department of Corporate Affairs is studying accounting standards for digital assets, and policymakers continue to assess the industry\'s long-term regulatory framework.

Global regulatory trends differ from India\'s path

India\'s cautious stance contrasts with the direction of multiple major jurisdictions. These regions have introduced specific cryptocurrency regulations rather than adopting broad restrictions. The European Union has implemented the Cryptographic Asset Markets Act (MiCA) framework, and countries such as Singapore and the United Arab Emirates have established licensing systems designed to regulate digital asset businesses rather than ban the industry.

Industry experts believe that India\'s final crypto regulatory framework may be influenced by evolving international standards and recommendations from global bodies such as the G20 and the Financial Stability Board. As India continues to engage in international discussions on digital asset regulation, policymakers may try to balance encouraging innovation with addressing concerns such as financial stability, consumer protection and illegal financial activity.

Regulatory uncertainty continues to plague the industry

The lack of comprehensive cryptocurrency laws has created uncertainty for exchanges, blockchain startups and institutional investors operating in India. Although cryptocurrency trading remains legal under the current tax regime, companies are still waiting for clearer rules covering licensing, custody requirements, investor protection and stablecoin regulation. Industry participants believe that regulatory clarity can help improve compliance, attract investment, and reduce reliance on offshore platforms.