Indian authorities are now reportedly set to investigate 400 Binance traders for crypto tax fraud. This development follows Binance’s re-entry into the Asian market, during which it registered as a “reporting entity”.
Indian Finance Ministry targets tax evasion among wealthy Binance traders
According to a recent report by local media outlet The Economic Times, the Income Tax department under the Central Board of Direct Taxes (CBDT) in India has been ordered to investigate 400 wealthy individuals for hiding their crypto transactions on the Binance exchange.
These traders are suspected of evading taxes on their crypto profits between 2022-23 and 2024-25, while also refusing to reveal their investments in various exchange wallets outside the country. In India, there is a 1% tax on each crypto sale, followed by a total tax ranging from 33% to 38% on each profit, as well as a 4% fee that could bring the effective tax rate to around 42.7%.
Wealthy Indian traders have long relied on foreign exchanges such as Binance to escape the country’s strict crypto tax regime, a strategy that has now backfired amid recent enforcement measures. According to The Economic Times, many of these transactions were facilitated by transferring USDT, a stablecoin, to Binance accounts, or through traditional banking channels under the Reserve Bank of India’s liberalized remittance program.
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 FIU. This arrangement allowed 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, the ITD would also assess peer-to-peer trading activity on the Binance exchange. According to data from Statista, the crypto market in India remains vibrant and is expected to reach a revenue of $9.7 billion in 2025.
Although the Asian nation is crypto-friendly as digital assets are recognized investments, the regulations are also very cautious with a view to protecting the interests of consumers. For example, the Bombay Stock Exchange recently rejected a company’s public listing due to crypto investment intentions using raised capital.
Crypto Market Overview
At the time of writing, the total crypto market cap is valued at $3.68 trillion, representing a slight recovery of 1.67% over the past day. At the same time, the total daily trading volume increased by 32.40% and is valued at $400.72 billion.
Featured image from Flickr, chart from Tradingview
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