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Missed Crypto Income Could Trigger Tax Notices in 2026
Crypto exchanges can send tax information to the government.
They may also deduct a tax amount called TDS from some transactions.
If your tax return does not show crypto income but the exchange reports TDS using your PAN, the information may not match.
This mismatch can lead to a tax notice.
If you missed reporting income, first collect transaction records from every exchange you used.
Then calculate the correct gains under the applicable tax rules.
Paying tax alone is not enough because the return must also show the income.
Correcting the return voluntarily may be better than waiting for a notice.
Investors should also check that their TDS claims and transaction records are complete and accurate.
Crypto exchanges operating in India may deduct TDS under Section 194S and report it independently of an ITR.
A mismatch between exchange-reported TDS and an ITR showing no crypto income can flag an omission.
Taxpayers should collect records from every exchange and calculate gains under Section 115BBH.
Simply paying tax does not correct an omitted income entry; the ITR itself must be updated through a belated or revised return, where permitted.
Voluntary correction may avoid additional penalties associated with waiting for a notice, while investors should reconcile gains, losses, records, and TDS claims.
- Who
- Crypto investors and taxpayers, along with crypto exchanges and the Income Tax Department.
- What
- Taxpayers who fail to report crypto income may receive a notice if exchange-reported TDS does not match their ITR.
- Where
- India.
- When
- During the 2026 ITR filing process and within the applicable belated or revised return window.
- Why
- Exchanges may independently report TDS against a taxpayer’s PAN, allowing the department to identify inconsistencies in the ITR.
Key facts
- Relevant TDS provision
- Section 194S
- Crypto income provision
- Section 115BBH
- Main trigger for scrutiny
- A mismatch between exchange-reported TDS and the taxpayer’s ITR
- Required correction
- The omitted income must be reported in the ITR; paying tax alone is insufficient
- Recommended records
- Transaction histories from every crypto exchange used during the relevant financial year
- Possible filing route
- A belated or revised return, depending on the applicable filing window
- Common reconciliation check
- TDS reported by exchanges should match the TDS claimed by the taxpayer
Quotes
Agarwal
Tax expert quoted by Business Today on crypto reporting mismatches
“The department already has the transaction on record before you file anything. Your ITR not reflecting it is what draws attention, not the transaction itself.”
businesstoday.in
“Correcting voluntarily costs tax and interest. Waiting for a notice adds a penalty on top of both, and in serious cases, prosecution enters the picture.”
businesstoday.in
Sources
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