India presents a paradox that no other crypto market replicates at scale: the world’s largest grassroots crypto user base, ranked first by Chainalysis for three consecutive years, with more than 90% of its trading activity occurring on platforms the government cannot tax. The Finance Act 2022 introduced a flat 30% tax on Virtual Digital Asset gains, a 1% Tax Deducted at Source on every transfer, and a prohibition on loss offsets. The explicit aim was to improve transaction traceability and generate revenue. The documented outcome has been the opposite: a sustained migration of Indian users and trading volumes to offshore exchanges that neither deduct TDS, file returns with Indian authorities, nor contribute to the domestic tax base.

The data that has accumulated across research institutions, parliamentary disclosures, and regulatory reports since 2022 maps this migration in detail. Between July 2022 and October 2025, Indian users are estimated to have traded over ₹6 lakh crore on offshore platforms while the government collected just ₹1,095 crore in TDS from compliant domestic exchanges. Cumulative uncollected TDS from offshore trading is estimated at over ₹11,000 crore. The total income tax revenue loss from offshore capital flight, estimated conservatively by the TKF Report at a 10% profitability benchmark on offshore volumes, approached ₹36,257 crore as of October 2025.

At KoinX, we assist Indian investors and tax professionals with compliant VDA reporting on domestic and offshore activity. The scale of the compliance gap documented in this article is precisely why robust tools for Schedule VDA reporting, TDS tracking, and cross-platform gain calculation have become essential for any Indian participant in the digital asset market.

This article draws on primary research from India’s Esya Centre, the TIOL-TKF Report on Taxation of Digital Assets, the Bharat Web3 Association, NALSAR University of Law, the Chainalysis Geography of Cryptocurrency Reports, FIU-IND’s Annual Report for FY 2024-25, and Ministry of Finance parliamentary disclosures. Every statistic is sourced to its originating document.

Scope and Methodology

All statistics in this article are drawn from primary sources that generated the underlying data themselves. Eligible sources include independent research institutions publishing original empirical analysis of India’s VDA market (Esya Centre, TIOL-TKF), India’s FIU-IND Annual Report, Ministry of Finance parliamentary disclosures to the Rajya Sabha and Lok Sabha, Chainalysis Geography of Cryptocurrency Reports, and regulatory enforcement records.

Recency was enforced: only data published within the last two years was included. Where an earlier figure establishes a baseline for a trend that extends through the current period, the original publication year is noted in the bullet. Geographic scope is exclusively India. All statistics are presented atomically with one data point per bullet.

Material limitations of this dataset: the Indian government does not publish official aggregate statistics on the share of crypto trading occurring offshore or the total tax revenue lost to capital flight. The figures in this article are produced by independent research institutions and industry-backed reports applying transaction-level and web traffic data to quantify offshore activity. Where a figure is an estimate or projection, the methodology is noted in the bullet text. Government-collected figures such as TDS collections, CBDT enforcement disclosures, and FIU penalty amounts are treated as the highest-confidence data points and are distinguished from research estimates throughout the article.

India Crypto Offshore Trading at a Glance: 2026 Statistics

Between October 2024 and October 2025, Indian users generated approximately ₹4,87,799 crore (approximately $54.1 billion) in trading volume on offshore cryptocurrency exchanges, an 85% year-over-year increase from ₹2,63,406 crore in the prior period, based on the TIOL-TKF Report titled Taxation of Digital Assets in India, published November 2025 and referenced by Bharat Web3 Association in January 2026.
As of October 2025, 91.5% of Indian crypto trading occurs on offshore platforms, with only 8.5% remaining on registered domestic exchanges, based on the TIOL-TKF Report on Taxation of Digital Assets in India, November 2025, referenced by Bharat Web3 Association and beincrypto.com in January 2026.
Since the introduction of the 1% TDS in July 2022 through October 2025, cumulative uncollected TDS from offshore VDA trading is estimated at approximately ₹11,000 crore, of which ₹4,877 crore pertains to the October 2024 to October 2025 period alone, based on the TIOL-TKF Report on Taxation of Digital Assets in India, November 2025.
As of October 2025, the estimated total income tax revenue loss to the Indian exchequer from offshore crypto trading, computed at a conservative 10% profitability benchmark applied to offshore trading volumes since the 30% tax was introduced, amounts to approximately ₹36,257 crore, based on the TIOL-TKF Report on Taxation of Digital Assets in India and Bharat Web3 Association disclosures in January 2026.
The Indian government collected ₹1,095.8 crore in total TDS from domestic VDA transfers across three financial years (₹221.27 crore in FY 2022-23, ₹362.7 crore in FY 2023-24, and ₹511.83 crore in FY 2024-25), based on Ministry of Finance disclosures to the Rajya Sabha in December 2025.
Between July 2022 and November 2023, Indian users traded over ₹1.03 lakh crore (approximately $12.3 billion) worth of VDAs on offshore platforms that did not comply with TDS regulations, with cumulative uncollected TDS from this period estimated at over ₹3,493 crore (approximately $417 million), based on the Esya Centre Special Issue No. 214, The Impact of India’s VDA Tax Policy: An Update, December 2024.
Between December 2023 and October 2024, Indian users traded over ₹2.63 lakh crore (approximately $31.1 billion) on offshore platforms, accounting for over 60% of total VDA trading volume during this period, with ₹2,634 crore in TDS owed but not collected, bringing the total uncollected TDS since July 2022 to over ₹6,000 crore, based on the Esya Centre Special Issue No. 214, December 2024.
If current trends persist without policy change, offshore VDA trading by Indian users is projected to generate ₹17,700 crore in uncollected TDS over the five-year period following October 2024, with total projected offshore volumes reaching ₹17.7 lakh crore over that same period, based on the Esya Centre Special Issue No. 214, December 2024.

Domestic Exchange Volume Decline Statistics

Between February 2022 and January 2024, the total volume of VDAs traded on Indian domestic exchanges fell by approximately 97%, while active users on those platforms declined by approximately 81%, based on a 2024 study by the Centre for Tax Laws at NALSAR University of Law on TDS impact on the Indian VDA market, cited in Esya Centre Issue No. 42 (Taxes and Takedowns) and the BW Businessworld recalibration article of November 2025.
Since April 1, 2022, domestic VDA exchange volumes fell by almost two-thirds relative to pre-tax levels and increased only marginally following the URL-blocking of foreign exchanges in January 2024, with 88% of transaction volumes remaining lost from domestic exchanges as of March 2024, based on the Esya Centre Issue No. 42, Taxes and Takedowns, by Gautam and Sharma, June 2024.
Profitable users on domestic VDA exchanges fell by 96% and assets under control (AUC) fell by 53% following the introduction of the 30% tax and 1% TDS, with deposits declining by approximately 92% and withdrawals declining by approximately 83%, based on the Esya Centre Taxes and Takedowns report, Issue No. 42, June 2024.
WazirX saw daily trading volumes drop by 82-83% in early July 2022 following the implementation of the 1% TDS, while CoinDCX experienced volume declines of 70-90.9% during the same period, based on research cited in the Esya Centre Special Issue No. 214, December 2024.
WazirX’s total trading volume on its platform fell from approximately $43 billion in 2021 and $10 billion in 2022 to approximately $1 billion in 2023, reflecting the sustained impact of the VDA tax regime on domestic exchange volumes, based on Gnosis market analysis of Indian crypto exchanges citing exchange-level data, published in 2024.
Total crypto trading volume across India’s top 4 domestic exchanges from January to May 2023 was $2.61 billion, down 82.3% from $14.78 billion during the same period in 2022, a steeper decline than the 76.6% decrease in Indonesian crypto trading volumes during the same period, based on CoinGecko’s Top Crypto Exchanges in India 2023 Study.
Web traffic to major domestic exchanges including CoinDCX, CoinSwitch, WazirX, Mudrex, Giottus, ZebPay, and Bitbns declined by 34% from January to October 2024, while web traffic from Indian users to the nine blocked offshore exchanges rose by 57% during the same period and overall traffic to offshore platforms increased by 77%, based on the Esya Centre Special Issue No. 214, December 2024.
Following the announcement of the crypto tax regime in February 2022, cumulative trade volume worth approximately ₹32,000 crore shifted from domestic centralized VDA exchanges to foreign ones between February and October 2022, of which ₹25,300 crore was offshored within the first six months of FY 2022-23, based on the Esya Centre Special Issue No. 208, Virtual Digital Asset Tax Architecture in India: A Critical Examination, January 2023.

Offshore Usage and Capital Flight Statistics

Between July 2022 and July 2023, Indian users traded VDAs worth over $42 billion on offshore exchanges, accounting for more than 90% of their total VDA trading volume during the period, based on the Esya Centre Impact Assessment of Tax Deducted at Source on the Indian Virtual Digital Asset Market, Special Issue No. 210, November 2023.
A single offshore exchange reported 450,000 new Indian user registrations in the month following the implementation of the 1% TDS in July 2022, with an estimated 3 to 5 million Indian users shifting to offshore platforms since the TDS was announced in February 2022, based on the Esya Centre Impact Assessment of TDS, Special Issue No. 210, November 2023.
Following the introduction of the VDA tax regime in 2022, Indian domestic VDA exchanges lost 97.1% of their trading volume in October 2022 compared to January 2022, while foreign exchanges lost only 36.3% of volume during the same period, with the trading volume on Indian exchanges as a share of foreign exchanges falling from 0.57% in January 2022 to 0.03% in October 2022, based on the Esya Centre Special Issue No. 208, January 2023.
Between July 2022 and July 2023, over ₹3,50,000 crore in VDA transactions were conducted by Indians through peer-to-peer exchanges, which do not deduct TDS and fall outside the domestic reporting framework, based on the Esya Centre Taxes and Takedowns report, Issue No. 42, June 2024.
Web traffic to the nine exchanges blocked by FIU-IND in January 2024 increased by 57% between January 2024 and October 2024, indicating that URL blocking measures were largely circumvented through VPNs and mirror applications, while domestic platform traffic increased by only 21% during the same period, based on the Esya Centre Special Issue No. 214, December 2024.
Domestic peer-to-peer advertisers on VDA platforms declined by 30% during the January to October 2024 period, while offshore platform activity from Indian users increased by 77% over the same timeframe, based on the Esya Centre Special Issue No. 214, December 2024.
As of the time of the Esya Centre December 2024 report, KuCoin was the only FIU-registered foreign exchange that had begun deducting TDS through a local entity (from March 2024), with its contribution to total offshore trading volumes by Indian users remaining below 5%, based on the Esya Centre Special Issue No. 214, December 2024.
In a 2024 study of 13,000 peer-to-peer traders, Indian domestic exchange executives identified the 1% TDS as the most important reason for high offshore peer-to-peer trading volumes, with survey respondents identifying a reduction to 0.01% TDS as the most important corrective measure to motivate traders to return to domestic exchanges, based on the Esya Centre Impact Assessment of TDS, Special Issue No. 210, November 2023.

Tax Leakage and Revenue Loss Statistics

In FY 2022-23, of the ₹258 crore collected in TDS from domestic and offshore platforms combined, ₹250 crore (97%) was paid by domestic Indian VDA exchanges, while only ₹7 crore (less than 0.2% of the ₹3,500 crore that should have been collected) came from trades by Indians on offshore platforms, based on the Esya Centre Impact Assessment of TDS, Special Issue No. 210, November 2023.
Estimated total tax revenue lost since the introduction of the VDA framework, including both uncollected TDS and foregone capital gains tax on offshore profits, reached approximately ₹36,000 crore by October 2025, compared to the ₹1,095 crore actually collected in TDS from domestic exchanges over the same three-year period, based on the TIOL-TKF Report on Taxation of Digital Assets in India, November 2025.
A scenario modeled by the Esya Centre in which TDS is reduced to 0.01% and the domestic platform asset share reverts to pre-February 2022 levels would return approximately 82% of Indian users to domestic or compliant platforms and could generate between ₹9,169 crore and ₹18,338 crore in additional tax revenue over five years, based on the Esya Centre Special Issue No. 214, December 2024.
The 1% TDS applied on the entire transaction value regardless of profit or loss wipes out more than 90% of available liquidity from the market within the first quarter of trading under reasonable assumptions of trading frequency and spread, making domestic market-making economically unviable for professional traders, based on the Esya Centre Taxes and Takedowns report, Issue No. 42, June 2024.
India’s FY 2024-25 TDS collection of ₹511.83 crore, while the highest in the three-year series, remained a fraction of estimated offshore obligations: the same period saw ₹4,877 crore in uncollected TDS on offshore trading volumes, meaning the government collected approximately 9.5% of the TDS theoretically owed by Indian crypto traders in that fiscal year, based on TIOL-TKF Report figures and Ministry of Finance TDS disclosures to the Rajya Sabha in December 2025.
The current VDA tax framework, combining a 30% flat capital gains tax, 1% TDS, and prohibition on loss offsets, is the only asset class in India subject to both TDS and capital gains tax simultaneously, with no analogue in stocks, mutual funds, or commodities, all of which permit loss set-offs and do not impose TDS on the full transaction value, based on the Esya Centre analysis in Taxes and Takedowns Issue No. 42, June 2024.
A NALSAR University of Law study estimated that India lost approximately ₹2,500 crore in tax revenue in a single year through offshore and peer-to-peer VDA transactions, and separately estimated that reducing the TDS rate with improved compliance mechanisms could recover up to ₹7,000 crore in tax revenue over five years, based on the NALSAR Centre for Tax Laws study on TDS effects on the Indian VDA market, referenced in the BW Businessworld article of November 2025.

Enforcement Response to Offshore Capital Flight Statistics

In December 2023, FIU-IND issued PMLA compliance show-cause notices to 9 offshore exchanges (Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex), and on January 12, 2024, directed the Ministry of Electronics and Information Technology to block their URLs, apps, and websites, based on the FIU-IND compliance notice referenced in the CoinDesk report of December 28, 2023.
Following the January 2024 URL blocking of the nine offshore exchanges, domestic platform CoinDCX reported a 2,000% surge in user deposits in the period immediately following the show-cause notices, reflecting a temporary redirection of trading from offshore to compliant domestic platforms, based on CoinDCX statements referenced in CryptoNews and finlaw.in reporting from January 2024.
Despite the January 2024 URL-blocking enforcement action, Indian users continued migrating to offshore platforms with web traffic to the nine blocked exchanges rising 57% from January 2024 to October 2024, demonstrating that URL-blocking was circumvented through VPNs and alternative access methods, based on the Esya Centre Special Issue No. 214, December 2024.
In October 2025, FIU-IND issued non-compliance notices to 25 additional offshore VDA Service Providers for serving Indian users without PMLA registration, directed that their platforms and URLs be blocked, and by January 2026 had blocked 25 foreign exchanges in total, based on FIU-IND regulatory actions reported by CoinGeek and MEXC News in January 2026.
During FY 2024-25, FIU-IND imposed total penalties of ₹28 crore on non-compliant crypto exchanges, including ₹18.82 crore on Binance (Nest Services Limited) in June 2024 for operating without PMLA registration, and ₹9.27 crore on Bybit Fintech Limited in January 2025 for similar violations, based on the FIU-IND Annual Report FY 2024-25, published January 2026.
As of March 2025, only 4 of the 49 exchanges registered with FIU-IND were offshore platforms, meaning the vast majority of foreign exchanges still serving Indian users operated outside the PMLA framework at the time of the FIU-IND Annual Report for FY 2024-25, published January 2026.
Binance was registered with FIU-IND by June 2024 after paying ₹18.82 crore in penalties but had not implemented automated 1% TDS deduction at the time of the Esya Centre December 2024 report, illustrating the gap between PMLA registration and full TDS compliance for offshore exchanges, based on the Esya Centre Special Issue No. 214, December 2024.

Domestic Exchange Impact and Investor Behavior Statistics

Indian domestic VDA exchanges entered a prolonged survival phase following the 2022 tax regime, with CoinDCX, CoinSwitch, WazirX, BuyUCoin, ZebPay, and Giottus all implementing cost cuts, partner renegotiations, hiring freezes, layoffs, and extended financial runways measured in months rather than years, based on CoinDesk’s survey of six major Indian crypto platforms published May 2023.
WazirX’s NFT marketplace, which had generated only $6 in fees in its final 30 days of operation, closed in February 2024 citing insufficient user activity and low revenue, a direct consequence of the sharp decline in domestic crypto engagement following the VDA tax regime, based on CoinTelegraph India crypto tax analysis published June 2025.
CoinDCX laid off 12% of its staff in August 2022 amid the unfavorable tax environment and crypto market downturn, while trading volumes on Indian exchanges overall fell from $4.7 billion at the beginning of 2022 to $137 million by October 2022, based on Esya Centre reporting referenced in BeInCrypto’s 2023 analysis.
A 2026 CoinSwitch survey found that 66% of Indian crypto investors perceive the current VDA tax regime as unfair, and 59% reported reducing their crypto participation due to the tax environment, based on the CoinSwitch investor survey cited in the AInvest analysis of India’s evolving crypto tax regime published February 2026.
Under the KoinX analysis of FY 2024-25 data, 1% TDS accounted for just 0.60% of overall turnover on domestic Indian exchanges, demonstrating that the TDS generates minimal fiscal revenue relative to its transactional friction and its role in driving users offshore, based on KoinX FY 2025 data analysis referenced in AMBCrypto’s budget analysis of February 2026.
India’s Union Budget 2026 introduced penalty provisions effective from April 1, 2026 under Section 509 of the Income-tax Act 2025: a ₹200 per day penalty for failure to submit VDA transaction statements and a ₹50,000 flat fine for inaccurate or uncorrected reporting, without reducing the 30% tax rate or the 1% TDS, based on the Finance Bill 2026 provisions referenced in KuCoin and AMBCrypto reports of February 2026.

Comparative Tax Treatment and Global Context Statistics

India is the only major economy to apply a TDS on the full transaction value of every crypto trade rather than on net realized gains, creating a compliance burden that no other comparable capital market in India imposes on investors, as the existing TDS on stocks and securities applies at 0.001% on turnover rather than 1%, based on the Esya Centre analysis in Taxes and Takedowns, Issue No. 42, June 2024.
India’s 30% flat crypto capital gains tax applies uniformly regardless of holding period, compared to the United States where crypto is subject to capital gains rates of 0-20% for long-term positions with full loss-offset permitted, and the United Kingdom where disposals are subject to capital gains tax at 18-24% with a £3,000 annual exemption and loss-offset provisions, based on NALSAR and Esya Centre comparative tax analysis referenced in the BW Businessworld November 2025 article.
Under the current Indian VDA tax framework, losses from one virtual digital asset cannot be set off against gains from another, nor against any other income, and cannot be carried forward to subsequent years, making India among the most restrictive jurisdictions globally for crypto loss treatment alongside Japan and Brazil, based on the Esya Centre Special Issue No. 208, January 2023, and the Taxes and Takedowns report, Issue No. 42, June 2024.
The OECD’s Crypto-Asset Reporting Framework (CARF), to which India has indicated intent to commit with exchanges expected in 2027, is expected to automatically surface Indian users’ offshore VDA holdings to Indian tax authorities by providing data from CARF-participating jurisdictions to the Indian government, based on the OECD CARF Monitoring and Implementation Update, November 2025.
In March 2026, the CBDT amended Income Tax Rules 114F, 114G, and 114H to bring crypto assets, Central Bank Digital Currencies, and specified electronic money products within India’s FATCA/CRS reporting framework, extending automatic information exchange obligations to VDA holdings for the first time, based on reporting by The Crypto Times in April 2026.

References

Scope and Methodology
India Crypto Offshore Trading at a Glance: 2026 Statistics
Domestic Exchange Volume Decline Statistics
Offshore Usage and Capital Flight Statistics
Tax Leakage and Revenue Loss Statistics
Enforcement Response to Offshore Capital Flight Statistics
Domestic Exchange Impact and Investor Behavior Statistics
Comparative Tax Treatment and Global Context Statistics
References

© All rights reserved by Simplify Infotech Private Limited