Your trading history and crypto assets on Binance aren’t directly visible to the Income Tax Department but they’re not invisible to the ITD, either. Since the ITD increased scrutiny on domestic crypto exchanges, many Indian crypto traders switched to foreign exchanges like Binance to limit their exposure. It’s true that Binance doesn’t share trading data like domestic platforms, but its regulatory reporting provides enough visibility to the ITD to keep tabs on your undisclosed crypto gains.
Binance is registered with India’s Financial Intelligence Unit and is a legal reporting entity under PMLA. So, it is required to submit Suspicious Transaction Reports to FIU-IND containing your KYC details, wallet addresses, transaction details, and counterparty information.
Beyond PMLA tracking, India’s Income-tax (Amendment) Rules, 2026 introduced a larger cross-border tracking pipeline through the global Crypto-Asset Reporting Framework (CARF). Under this framework, your entire 2026 crypto trading history on Binance will be shared with the ITD starting April 2027. Essentially, your international trades might look hidden right now, but a paper trail is already being built behind the scenes.
So, if you trade crypto on Binance, properly calculate your crypto gains, and pay the 30% tax under Section 115BBH. Every VDA disposal goes individually into Schedule VDA in ITR-2 or ITR-3.
Key Takeaways
- For now, Binance does not deduct Section 194S TDS on spot trades and for P2P trades; the legal obligation to deduct 1% TDS sits with the Indian buyer, not with Binance.
- Indian residents trading on Binance must calculate and pay 30% tax under Section 115BBH. They must also file Schedule VDA in ITR-2 or ITR-3.
- On January 1, 2026, India updated its Income-tax Rules (114F, 114G, and 114H) to officially track digital assets. Due to the global CARF framework, offshore exchanges like Binance will soon have to share Indian users’ transaction data from AY 2026 directly with the ITD, starting April 2027.
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How Binance Reports to the Income Tax Department
Binance’s reporting to the ITD works differently from a domestic exchange. There is no SFT filing covering your trade volume and no automatic TDS deduction on spot trades. What exists is a confirmed FIU data sharing obligation under PMLA and an incoming CARF obligation from April 2027.
Reporting Channel | What Binance Does | What the ITD Receives |
Section 194S TDS | Not applicable on spot trades. On P2P transactions, the Indian buyer is legally required to deduct 1% TDS. Binance does not deduct it automatically. | No TDS credit appears in AIS from Binance spot trades. P2P TDS, if deposited by the buyer via Form Form 141 (Schedule D), appears in Form 26AS and AIS against the seller’s PAN. |
FIU-IND Data Sharing under PMLA | Binance submits Suspicious Transaction Reports and Cash Transaction Reports to FIU-IND. Reports contain KYC details, wallet addresses, transaction details, and counterparty information. | FIU-IND shares suspicious patterns, high-value crypto trade footprints, and undeclared foreign account details with CBDT and the ITD under inter-departmental data-sharing arrangements. |
CARF under Rules 114F, 114G, and 114H of the Income-tax Rules, 1962 | From April 2027, Binance will be required to report Indian user transaction data to the tax authority in its country of legal registration. | From April 2027, the ITD will receive ongoing transaction-level data on Indian Binance users through the CARF pipeline. Coverage includes buys, sells, wallet transfers, and asset valuations. |
How the ITD Tracks Your Binance Transactions
Binance’s FIU reporting obligation is not the only way the ITD sees your activity. The ITD has independent tracking mechanisms that operate regardless of what any exchange files.
KYC and PAN-Linked Account Data
Binance’s mandatory KYC re-verification requires all Indian users to submit their PAN details. Every PAN submitted is permanently linked to that Binance account. Any data Binance shares with FIU-IND is submitted against that PAN. The ITD cross-references this against your filed ITR through Project Insight.
AIS and Project Insight
Your AIS won’t have TDS entries for spot trading on Binance but can have entries of your P2P trades. When you sell crypto via P2P, the Indian buyer is legally required to deduct 1% TDS and submit it via Form 141 (Schedule D). Once deposited, this credit reflects directly in your Annual Information Statement (AIS).
Even if a P2P buyer fails to deduct TDS, the ITD can still trace the transaction because banks automatically report high-volume third-party deposits under SFT rules. If Project Insight notices a major mismatch between these SFT bank records and your ITR, it can trigger a “Nudge” alert directly to your AIS. If you ignore such alerts it can quickly escalate into formal tax notices.
Cross-Border Reporting Framework (CARF)
From April 2027, the Income-tax (Amendment) Rules, 2026 bring full cross-border transaction data exchange under CARF. This means that from January 2026, Binance is required to collect Indian user transaction data and submit to its local tax authority under CARF obligations. That data will be delivered to India’s ITD in April 2027, through the CARF government-to-government pipeline.
Note: Every on-chain transaction from your Binance account leaves a publicly traceable record. The ITD has trained officers that trace crypto wallet addresses and link them to KYC data. This has nothing to do with Binance’s reporting but ITD does it independently through blockchain analytics in collaboration with the NFSU, Goa.
What CARF Means for Every Indian Binance Trader from April 2027
Right now, a routine Binance spot trader’s AIS shows nothing from Binance: no TDS entry and no SFT data. For most Indian Binance users, this silence has felt like safety. It is not; it is a window that closes from April 2027. Let us walk you through this with the help of an example:
Real Life Example
Priya has traded on Binance since FY 2023-24. Her AIS has never shown a Binance entry. She has not declared her Binance gains in Schedule VDA for any year, assuming her activity sits outside the ITD’s reach.
Detail | Figure |
Priya’s total buy value on Binance, FY 2025-26 | Rs 2,80,000 |
Priya’s total sell value on Binance, FY 2025-26 | Rs 3,20,000 |
Actual net gain (Rs 3,20,000 minus Rs 2,80,000) | Rs 40,000 |
Tax at 30% under Section 115BBH on Rs 40,000 | Rs 12000 |
4% health and education cess on Rs 12,000 | Rs 480 |
Total tax payable for FY 2025-26 | Rs 12,480 |
TDS deducted by Binance on spot trades | Rs 0 |
Binance gains declared in Schedule VDA | Rs 0 |
AIS entry from Binance | None |
Outcome | Rs 12,480 in undeclared tax liability for FY 2025-26 alone. The ITD will receive Priya’s Binance transaction data through the CARF pipeline in 2027. As a result, her undeclared gains across multiple years will surface at that point. And the ITD will issue an automated show-cause notice under Section 148A demanding an explanation. |
What About Trades Before 2026?
CARF data collection in Binance’s home jurisdiction starts from January 2026. Trades before that date are not directly in the CARF pipeline. However, because CARF requires identifying historical cost basis to calculate gains accurately, the audit process may uncover undeclared profits from earlier years, exposing traders to retroactive tax liability and interest.
This means that though Priya’s undeclared gains from FY 2023-24 and FY 2024-25 are not directly in the CARF data, they may surface through the cost basis audit process.
The Fix
File Schedule VDA correctly for FY 2025-26 before the July 31 deadline. For previous years where Binance gains were not declared, you can file a revised return under Section 139(5) until December 31, 2026 for FY 2024-25. For earlier years, an updated return under Section 139(8A) is the correct path.
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How to Download Your Complete Binance Transaction History
Your Binance transaction history CSV is the starting point for every tax calculation. It is the only document that shows your actual gains, taxable events, and transaction-level detail for Schedule VDA. Since Binance does not issue a TDS certificate for spot trades, your tax calculation will be supported by your CSV.
Generating a Master Account Statement
- Log in to your Binance account on your web browser.
- Hover over the “Wallet” menu icon at the top right of the screen and click “Asset History.”
3. Click the “export” icon and select “Export Transaction Records.”
4. Set the custom date range (April 1, 2025 through March 31, 2026) to cover the complete financial year.
5. Select “All Accounts” (this automatically includes your P2P trades, Funding, and Earn data) and “All Coins.”
6. Click “Generate” and download the file once the processing is complete.
Binance compiles data across all underlying sub-wallets, so “all accounts” statements take up to a few hours to compile. Binance limits users to generating 5 comprehensive statements per month, and the download link expires after 7 days.
The Faster Alternative
Binance limits each export to 10,000 trades. If you’re an active trader with trades exceeding this limit or you want to avoid manual file management, the most efficient way is to utilize an automated sync. Inside your Binance API Management settings, you can click “Create Tax Report API”.
This generates a secure, read-only data string specifically designed for tax compliance platforms. It allows a tax engine to securely map your complete transaction history without exposing your funds or allowing withdrawals.
After Downloading
Import all CSV files into KoinX via the Binance integration. KoinX efficiently maps every transaction type and calculates the taxable gain per disposal at 30% under Section 115BBH with 4% cess.
If any P2P TDS was deposited by a buyer via Form 141 (Schedule D), that credit appears in your AIS at the ITD’s e-filing portal against your PAN. Check before filing to ensure any TDS credits are carried correctly into Schedule VDA.
Common Misconceptions About Binance and ITD Reporting
Most Binance traders who face ITD scrutiny held at least one of these beliefs. Reading this section before filing is worth your time.
Binance is a Foreign Exchange, So the ITD Cannot See My Trades
Binance is registered with India’s FIU-IND under PMLA as a Virtual Digital Asset Service Provider. It is legally required to submit Suspicious Transaction Reports and Cash Transaction Reports to FIU-IND. FIU-IND shares this intelligence with the CBDT and the ITD under inter-departmental data-sharing arrangements.
Binance Does Not Deduct TDS, So I Have No Tax Obligation
The 30% tax under Section 115BBH applies to every VDA disposal regardless of whether TDS is deducted. TDS is a mechanism for collecting advance tax at source. Its absence on Binance spot trades does not remove the underlying tax liability. The full obligation must be calculated from your transaction CSV and discharged independently. Missing the filing deadline (31st December of an assessment year) attracts a late fee under Section 234F of Rs 5,000.
My AIS Shows Nothing from Binance, So I Must Be Compliant
AIS reflects data that has been reported against your PAN through formal channels. For most Binance spot traders, AIS will show no entry from Binance because it does not file SFT and deducts no TDS on spot trades.
However, a blank AIS entry from Binance does not mean the ITD has no data about your activity. FIU-IND intelligence, blockchain analytics, and the upcoming automated data exchange under CARF all operate independently of what appears in your AIS. Schedule VDA must be filed regardless of what your AIS shows.
P2P Trades on Binance are Invisible to the ITD
Under Section 194S,, the Indian buyer in every P2P VDA transaction above the annual threshold is legally required to deduct 1% TDS. This means if a buyer deposited TDS via Form 141 (Schedule D), that credit reflects directly in the seller’s AIS.
My Binance Activity Before April 2027 Is Safe From ITD Scrutiny
Don’t forget that the ITD has the legal power to pull your complete transaction history from Binance at any moment under Section 13 of PMLA. In fact, FIU-IND is already actively sharing intelligence on flagged activities directly with the CBDT behind the scenes. On top of that, the tax department uses its own advanced blockchain analytics to track on-chain wallet movements, completely independent of what any exchange reports.
So, while the automated CARF data pipeline won’t start sharing information until April 2027, the mandatory tracking rules are already up and running right now.
How to Report Your Binance Trades Correctly
Now that you know that your crypto trades on Binance aren’t completely invisible to ITD, it’s wise to report it all yourself. The right way to report your Binance trades and gains for FY 2025-26 has three important steps:
Step 1: Calculate Your Actual Gains from the Binance CSV
Download your complete Binance transaction history from April 1, 2025 to March 31, 2026. Go through each VDA disposal separately and calculate the gain by subtracting the cost of acquisition from the sale price. For crypto-to-crypto swaps, use the INR fair market value at the time of the swap as the sale price.
Step 2: Check Your AIS Before Filing
Log in to the ITD’s e-filing portal and open your Annual Information Statement (AIS). Check for any P2P TDS credits deposited by buyers via Form 141 (Schedule D). These appear against your PAN and should be verified before filling out your return.
Step 3: File Schedule VDA in ITR-2 or ITR-3
Report each VDA disposal individually in Schedule VDA. Do not report a lump sum total. If you discover any P2P TDS credits in your AIS then carry those into the corresponding TDS Schedule to offset your final tax liability. Investors should use ITR-2 and traders whose Binance activity qualifies as business income should use ITR-3.
Conclusion
Binance reports to the Income Tax Department through FIU-IND data sharing under PMLA, and from April 2027 there will be full transaction-level reporting under CARF. The ITD’s visibility into Binance activity is wider than most Indian traders assumed. To avoid any legal notices from ITD it is advised that you must calculate your actual gains from the Binance CSV, file Schedule VDA in ITR-2 or ITR-3.
However, if you trade actively on Binance, then managing a full year of transactions across spot, P2P, staking, and futures, can be extremely overwhelming. Doing it all manually may even lead to errors and gaps that can turn into a nightmare during ITR filing. All of this can be avoided by integrating your Binance account with KoinX. Be it importing the data and calculating the Schedule VDA figures or generating the AIS reconciliation summary, KoinX does it all for you.
Frequently Asked Questions
How Do I Check What Binance has Reported About Me to the ITD?
Log in to the ITD’s e-filing portal and open your Annual Information Statement. The AIS will show any P2P TDS credits deposited by buyers via Form 26QE against your PAN. For most Binance spot traders, AIS will show no entry from Binance directly since it does not file SFT and deducts no TDS on spot trades.
Will I Get a Tax Notice If I Traded on Binance But Did Not File an ITR?
Yes, the ITD can issue notices if your Binance activity creates a mismatch with your filed income records. FIU-IND reporting, AIS entries, and bank transactions can expose undeclared crypto activity. From April 2027, CARF will further increase visibility into Binance transactions of Indian users. Filing Schedule VDA correctly reduces the risk of future scrutiny and penalties.
Does Binance Deduct TDS on Crypto Trades?
No, Binance does not deduct Section 194S TDS on spot trades. However, P2P transactions between Indian traders on Binance makes the Indian buyer legally required to deduct 1% TDS and deposit it via Form 141 (Schedule D). If a buyer deducts and deposits TDS in a P2P trade, then that will reflect in the seller’s AIS.
Can I File an Updated Return for Previous Years of Undeclared Binance Gains?
Yes. A revised return under Section 139(5) is available until December 31, 2026 for FY 2024-25. For FY 2023-24 and earlier years, an updated return under Section 139(8A) is the correct path. Filing proactively before CARF goes live in April 2027 is significantly less costly than responding to a notice after.
Do I Need to Pay Tax on Binance Earnings If I Never Converted My Crypto to INR?
Yes, under section 115BBH, every VDA disposal is taxable regardless of whether the proceeds were converted to INR. Every crypto-to-crypto swap, P2P transfer above the threshold, and spot trade where crypto is sold constitutes a taxable event. The absence of INR in the transaction does not remove the tax obligation.
