Shiba

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Millions

Shiba Inu

Reserve

<h3 id="what-to-know">What to know:</h3>
<ul>
 <li>India reaffirmed its preference for restrictive crypto policies while the RBI opposed institutional exposure to digital assets through banks nationwide.</li>
 <li>Tax officials found that fewer than one-quarter of crypto traders reported transactions on their tax returns.</li>
 <li>Despite regulatory uncertainty, India still counted nearly 39 million crypto investors holding about $2.1 billion.</li>
</ul>
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India’s financial regulators have reinforced their <a href="https://36crypto.com/reserve-bank-of-india-deputy-governor-sparks-crypto-debate-says-bitcoin-lacks-any-real-worth/" rel="noopener noreferrer nofollow">cautious approach to cryptocurrencies</a>, with the central bank renewing its support for policies that keep digital assets outside the regulated financial system. Meanwhile, tax authorities have reported widespread shortcomings in crypto tax disclosures, highlighting another challenge facing the country’s digital asset sector. 
Government documents <a href="https://www.reuters.com/world/india/india-central-bank-backs-crypto-ban-tax-department-warns-evasion-risks-documents-2026-07-08/" rel="noopener noreferrer nofollow">reviewed</a> by Reuters showed that the Reserve Bank of India has maintained its preference for a crypto policy leaning toward prohibition. The central bank said banks and financial institutions should not hold, trade, or gain exposure to cryptocurrencies as part of efforts to reduce financial risks. 
Moreover, the RBI argued that restricting institutional involvement would help prevent cryptocurrencies from becoming integrated into the country’s regulated banking system. Officials maintained that this approach would better protect financial stability while limiting systemic risks linked to digital assets. 
Additionally, the central bank renewed its concerns over stablecoins. It warned that privately issued stablecoins backed by foreign currencies could weaken India’s monetary sovereignty if they gain broader acceptance. 
According to Reuters, the RBI also said rupee-backed stablecoins could reduce government revenue generated through currency issuance. Officials added that heavy redemption activity during periods of market stress could introduce additional risks to the financial system. 
Also Read: <a href="https://36crypto.com/shiba-inu-warns-users-to-avoid-legacy-domains-as-official-access-moves-to-shib-io/" rel="noopener noreferrer nofollow">Shiba Inu Warns Users to Avoid Legacy Domains as Official Access Moves to Shib.io</a> 
<h2 id="strong-tax-reporting-gaps-remain-a-major-regulatory-challenge-strong">Tax reporting gaps remain a major regulatory challenge</h2>
Alongside its policy recommendations, <a href="https://36crypto.com/india-tax-authorities-warn-crypto-transactions-are-straining-enforcement-systems/" rel="noopener noreferrer nofollow">India’s tax department</a> outlined several obstacles affecting cryptocurrency tax enforcement. Officials said many investors have not accurately disclosed their digital asset transactions. 
The documents revealed that fewer than one quarter of the 645,000 individuals who conducted cryptocurrency transactions during the financial year ending March 2023 reported those activities in their income tax returns. 
Furthermore, tax authorities explained that transactions processed through overseas exchanges and private wallets make it more difficult to identify beneficial owners. Consequently, verifying taxable income and recovering unpaid taxes has become increasingly challenging. 
Officials also identified rupee-denominated peer-to-peer cryptocurrency transactions as another compliance hurdle. Those transfers often leave limited records, making taxable income harder to trace through conventional monitoring systems. 
<h2 id="strong-india-s-crypto-adoption-remains-strong-strong">India’s crypto adoption remains strong</h2>
Despite ongoing regulatory uncertainty, India remains one of the world’s largest cryptocurrency markets by user participation. Millions of investors continue holding digital assets even as authorities advocate tighter oversight and stronger compliance measures. Government estimates cited by Reuters showed that nearly 39 million Indian investors held approximately $2.1 billion worth of digital assets at the end of May. 
Moreover, the growing investor base presents a balancing act for policymakers. Authorities are seeking stronger tax compliance while preserving financial stability and maintaining closer oversight of cryptocurrency activity across the market. 
India’s latest policy documents highlight a dual regulatory focus on restricting institutional exposure to cryptocurrencies and improving tax enforcement. While the Reserve Bank of India maintains its preference for limiting crypto’s role in the financial system, tax authorities are stepping up efforts to address reporting gaps as digital asset adoption remains significant. 
Also Read: <a href="https://36crypto.com/tether-records-largest-usdt-exchange-outflow-as-5-03b-leaves-ethereum-platforms/" rel="noopener noreferrer nofollow">Tether Records Largest USDT Exchange Outflow as $5.03B Leaves Ethereum Platforms</a> 
The post <a href="https://36crypto.com/india-reaffirms-crypto-ban-stance-as-tax-officials-flag-compliance-gaps/" rel="noopener noreferrer nofollow">India Reaffirms Crypto Ban Stance as Tax Officials Flag Compliance Gaps</a> appeared first on <a href="https://36crypto.com" rel="noopener noreferrer nofollow">36Crypto</a>.

India Reaffirms Crypto Ban Stance as Tax Officials Flag Compliance Gaps

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