Black Money in Crypto: Crypto Assets Covered under Black Money, Benami and PMLA Laws, Govt Tells Lok Sabha
Where crypto assets are held in benami names or represent undisclosed foreign holdings, authorities can initiate prosecution, confiscation, and tax proceedings, said the ministry.
The Central Government has confirmed that Virtual Digital Assets (VDAs), including cryptocurrencies, are fully covered under India’s anti-money laundering, benami property, and black money laws, even though crypto assets remain unregulated as a standalone sector.
In a written reply to the Lok Sabha, the Ministry of Finance informed that the Enforcement Directorate (ED) has so far attached, seized or frozen crypto assets worth ₹4,189.89 crore in various cases involving money laundering and proceeds of crime.
The Government further revealed that 29 persons have been arrested in crypto-related cases, 22 prosecution complaints have been filed, and one accused has been declared a Fugitive Economic Offender.
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The Ministry explained that cryptocurrencies are global in nature and operate across borders, making standalone domestic regulation ineffective without strong international coordination. For this reason, India has not yet introduced a comprehensive regulatory framework exclusively governing cryptocurrencies.
However, the Government made it clear that the absence of a dedicated crypto regulator does not mean immunity from law enforcement. VDAs are treated like any other asset under existing economic and criminal laws, enabling authorities to take action against tax evasion, misuse, and concealment of illegal income.
On the taxation front, the Income Tax Department has detected undisclosed income of ₹888.82 crore linked to VDA transactions during search and seizure operations. Using data analytics tools such as Project Insight and internal databases, tax authorities have matched crypto transaction data with Income Tax Returns to identify cases of non-reporting and mismatches.
Under the CBDT’s NUDGE campaign, more than 44,000 notices and communications have been sent to taxpayers who traded or invested in crypto assets but failed to disclose these transactions in Schedule VDA of their Income Tax Returns.
The Government has also brought cryptocurrencies under the Prevention of Money Laundering Act (PMLA), 2002, by classifying Virtual Asset Service Providers (VASPs) as reporting entities. These platforms are now required to report suspicious and specified transactions to the Financial Intelligence Unit-India (FIU-IND) for further analysis and investigation.
Further, the Ministry clarified that the Benami Property Act, 1988, and the Black Money Act, 2015, apply to all assets, including cryptocurrencies. Where crypto assets are held in benami names or represent undisclosed foreign holdings, authorities can initiate prosecution, confiscation, and tax proceedings.
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