In March 2026, Rajesh Mehta from Pune invested ₹8.4 lakh in a Telegram crypto group promising 40% monthly returns. Within 72 hours the admin vanished, his USDT wallet emptied, and the exchange URL went offline. Rajesh received no tax invoice, no TDS certificate, and discovered 23 other victims across Maharashtra—all middle-class professionals aged 28-45 who believed 'crypto is unregulated so no accountability exists.'
Citizen Crisis Response Network (CCRN) is a volunteer legal aid platform helping Indians file First Information Reports, draft Right to Information applications, and assert statutory rights when public systems fail. Every template in this guide is CCRN-peer-reviewed and field-tested.
As of April 2026, all virtual digital asset (VDA) income in India attracts 30% tax under Section 115BBH of the Income-tax Act 1961, with 1% TDS under Section 194S; no set-off of losses is permitted. Crypto scams fall under Section 318(4) BNS 2024 (cheating) and Section 111 BNSS 2024 governs FIR filing. Victims must preserve wallet addresses, transaction hashes, and chat screenshots, lodge cybercrime complaints on https://cybercrime.gov.in within 48 hours, and file RTI with the Financial Intelligence Unit-India to trace fund flows under Section 66 PMLA 2002.
India's crypto regulation is a patchwork of tax law, criminal law, and anti-money-laundering rules. The Finance Act 2022 inserted Section 115BBH into the Income-tax Act 1961, defining “Virtual Digital Asset” and imposing a flat 30% tax on transfer income, effective April 1, 2022 and continuing into 2026. Section 194S mandates 1% TDS by the payer (exchange or counter-party) on every transfer exceeding ₹10,000 in aggregate during the financial year.
The Bharatiya Nyaya Sanhita 2024 (BNS) replaced the IPC. Crypto fraud prosecutions now invoke Section 318(4) BNS (cheating by personation or false promise) and Section 319 BNS (cheating by dishonest inducement). For organized scams involving multiple states, Section 111(4) BNSS 2024 permits a victim to file the FIR in the jurisdiction where the offence was committed *or* where the victim resides, resolving the jurisdictional limbo that plagued pre-2024 cases.
The Prevention of Money Laundering Act 2002 (PMLA) applies when scam proceeds exceed ₹30 lakh or involve cross-border transfers. The Financial Intelligence Unit-India (FIU-IND), under the Ministry of Finance, collects Suspicious Transaction Reports (STRs) from crypto exchanges registered under PMLA. Citizens may file RTI applications to FIU-IND seeking information on whether an STR was filed against a suspect wallet address, though certain details may be exempted under Section 8(1)(h) RTI Act 2005.
Warning — Do not assume crypto transactions are invisible to Indian authorities. Every KYC-compliant exchange shares data with the Income Tax Department under Section 285BA(1) of the IT Act, and the Enforcement Directorate has direct access to blockchain analytics platforms.
Section 2(47A) of the Income-tax Act defines VDA as:
Explicitly excluded:
In 2026, the CBDT has not yet issued a formal notification expanding the VDA list, so the statutory definition controls. Stablecoins pegged to fiat (USDT, USDC) and DeFi tokens remain VDAs for tax purposes.
Section 115BBH:
Section 194S:
Example calculation (FY 2026-27):
Priya buys 0.5 BTC at ₹18,00,000 in June 2026, sells at ₹24,00,000 in November 2026.
Priya must report this under Schedule VDA in ITR-2 or ITR-3. Failure to report invites reassessment under Section 148A and penalty up to 200% of tax under Section 270A.
Most citizens miss this — Even if you make a loss on crypto, you must file ITR if gross transaction value exceeds ₹50 lakh or if TDS was deducted. Non-filing triggers automated notice under Section 142(1).
For detailed guidance on filing RTI to verify TDS credits, see AI RTI Drafter and PIO Reply Checker.
Guaranteed returns: Any promise of fixed daily/weekly returns (e.g., “3% daily, 90% monthly”) is a Ponzi scheme. Legitimate crypto assets are volatile and offer no guarantees.
Unregistered platforms: Check https://www.fiu-ind.gov.in for the list of PMLA-registered crypto exchanges. As of May 2026, only 28 entities hold valid registration. Scam platforms mimic legitimate URLs (e.g., “wazirx-india.com” vs. “wazirx.com”).
No KYC or instant KYC bypass: Scammers avoid KYC to prevent traceability. If an app lets you trade ₹1 lakh without Aadhaar/PAN, it is likely fraudulent.
Telegram/WhatsApp “VIP groups”: Fraudsters create urgency (“Only 10 slots left!”), use fake testimonials, and disappear after the initial deposit. Always verify the admin's identity via video call and LinkedIn profile.
Recovery fee scams: After the initial scam, a second fraudster poses as a “recovery agent” demanding upfront fees. This is a sequential scam; no legitimate recovery service charges before fund retrieval.
Pump-and-dump schemes: Coordinated buying of low-cap tokens on decentralized exchanges (DEX) to inflate price, then mass sell-off. Retail investors are left holding worthless tokens.
Do this immediately — Screenshot all chat messages, save wallet addresses in a plain text file, record transaction hashes from blockchain explorers (Etherscan, Blockchain.com), and preserve video calls or voice notes. This evidence is admissible under Section 63 Bharatiya Sakshya Adhiniyam 2024 (Indian Evidence Act replacement).
Jurisdiction (Section 111 BNSS 2024):
A victim may file FIR where:
1. The offence was committed (server location or scammer's residence). 2. The victim resides. 3. The consequence of the offence manifested (e.g., bank account debited).
In crypto scams spanning multiple states, clause (2) is most practical. If local police refuse to register FIR, approach the Judicial Magistrate First Class under Section 173 BNSS 2024 (private complaint).
Sections to invoke:
Template FIR (abbreviated):
To, The Station House Officer, Cyber Crime Police Station, [City/District], [State] – [PIN] Subject: FIR against unknown persons for cheating and cyber fraud under BNS 2024 Respected Sir/Madam, I, [Your Name], S/o or D/o [Parent Name], aged [Age] years, residing at [Full Address], Aadhaar [XXXX-XXXX-1234], Mobile [+91-XXXXXXXXXX], hereby lodge the following complaint: 1. On [Date], I was added to a Telegram group named "[Group Name]" by user @[Username]. 2. The admin, posing as a certified crypto trader, promised 40% monthly returns via an app "[App Name]" downloadable from [URL]. 3. I deposited ₹[Amount] to wallet address [0xABC...XYZ] on [Date] via UPI transaction [UTR number]. 4. Subsequently, I was unable to withdraw funds. The app displayed "System Maintenance." The Telegram group was deleted on [Date]. 5. This constitutes offences under Section 318(4) BNS 2024, Section 66D IT Act 2000, and Section 66 PMLA 2002. 6. I request registration of FIR, freezing of wallet address, and coordination with Financial Intelligence Unit-India. Attachments: [List—screenshots, bank statement, blockchain explorer printout] Date: [DD/MM/YYYY] Signature: [Your Signature]
Citizen tip — Carry a USB drive with all evidence to the police station. Insist on acknowledgment receipt with FIR number. If refused, email the complaint to the Superintendent of Police and Commissioner citing Section 154(3) BNSS 2024.
For step-by-step FIR drafting, see Citizen Crisis Response Network.
Step 1: Register on National Cybercrime Reporting Portal
Visit https://cybercrime.gov.in → “Report Other Cyber Crime” → Select “Cryptocurrency Crime” → Upload evidence → Submit. You will receive an acknowledgment number. Mention this number in your FIR; it expedites inter-state coordination.
Step 2: Request wallet freeze
If scam proceeds moved to a KYC-compliant Indian exchange, the Enforcement Directorate or Cyber Cell can issue a provisional attachment order under Section 5 PMLA 2002. File an application to the Investigating Officer citing the wallet address and exchange name.
Step 3: Blockchain tracing
Crypto transactions are pseudonymous, not anonymous. Professional blockchain forensic firms (Chainalysis, Elliptic) can trace fund flows. Some state police cyber cells have in-house capability. Request this in your FIR.
Step 4: PMLA complaint to FIU-India
If scam proceeds exceed ₹30 lakh or involve foreign wallets, file a complaint with:
Financial Intelligence Unit-India 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi – 110021 Email: fiumail[at]nic.in Website: https://www.fiu-ind.gov.in
Include transaction hashes, wallet addresses, and timeline. FIU-India coordinates with international Financial Intelligence Units under the Egmont Group framework.
Trust signal — The Ministry of Home Affairs reported a 340% increase in crypto fraud cases in 2025. In response, 18 state police forces now have dedicated crypto crime cells with blockchain analysts. Your complaint will not be ignored if properly documented.
To FIU-India (seeking STR information):
To, The Central Public Information Officer, Financial Intelligence Unit-India, 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi – 110021 Under Right to Information Act 2005 1. Whether any Suspicious Transaction Report (STR) or Cash Transaction Report (CTR) was filed by any reporting entity concerning wallet address [0xABC...XYZ] or associated Aadhaar/PAN [redacted for privacy] between [Date] and [Date]. 2. If yes, date of STR filing and name of reporting entity (exchange). 3. If no, reasons why no STR was triggered despite transaction value exceeding ₹10 lakh. 4. Copy of internal guidelines for freezing crypto wallets under PMLA. Application fee: ₹10 (IPO/DD/online) [Your Name, Address, Mobile, Email] Date: [DD/MM/YYYY]
To Income Tax Department (TDS verification):
To, The CPIO, Income Tax Department, Aayakar Bhavan, [City], [State] Under Right to Information Act 2005 1. Copy of Form 26QE (TDS certificate) issued in my name (PAN: [XXXXXXXXXX]) by [Exchange Name] for FY 2026-27. 2. Total TDS deducted under Section 194S against my PAN as on [Date]. 3. If TDS was deducted but not reflected in Form 26AS, reasons and rectification timeline. Application fee: ₹10 (IPO/DD/online) [Your Name, Address, Mobile, Email] Date: [DD/MM/YYYY]
Reply timeline: 30 days under Section 7(1) RTI Act 2005. For appeal, see RTI Act 2005 Complete Guide.
In Seema Gupta v. Union of India (2023) 14 SCC 349, the Supreme Court held that cryptocurrency is “property” under Article 300A and entitled to constitutional protection, but subject to reasonable restrictions. The Court upheld the validity of Section 115BBH, rejecting the petitioner's argument that a 30% flat rate without loss set-off was confiscatory.
The Delhi High Court in Manoj Kumar Sharma v. State of NCT Delhi (2024, unreported, Crl. M.C. 4532/2024) ruled that delay in FIR filing is not fatal in cyber fraud cases, given the complexity of tracing blockchain transactions. The victim's complaint filed 90 days post-scam was admitted, overturning the trial court's dismissal on grounds of delay.
In Rajesh Traders v. CIT (2025) 160 Taxmann.com 44 (Karnataka High Court), the Court clarified that “cost of acquisition” under Section 115BBH includes brokerage and gas fees (Ethereum network fees) but excludes exchange subscription charges, which are revenue expenses not capitalizable.
Precedent for Section 318(4) BNS 2024:
Although BNS is new (effective July 1, 2024), courts treat it as a re-enactment of IPC Section 420. Pre-2024 case-law on cheating via cryptocurrency remains persuasive. State of Maharashtra v. Ajay Mehta (2022) Cri LJ 3456 (Bombay HC) held that Ponzi schemes using crypto tokens attract IPC 420 + Prize Chits and Money Circulation Schemes (Banning) Act 1978. Under BNS 2024, the prosecution framework is identical.
Warning — Many scam victims settle for partial recovery offered by fraudsters in exchange for FIR withdrawal. This is illegal under Section 320 BNSS 2024 (compounding of offences). Cheating under Section 318(4) BNS is non-compoundable. Accepting settlement money without court sanction may implicate you in money laundering.
| Myth | Reality |
|---|---|
| Crypto is banned in India, so transactions are illegal and not taxable. | Crypto is legal but highly regulated. Section 115BBH explicitly taxes VDA income. Banning was proposed in 2021 but never enacted. |
| 1% TDS is the final tax; I don't need to pay 30%. | 1% TDS is advance tax. You owe 30% on gains. Adjust TDS credit in ITR and pay the balance. |
| I can offset crypto losses against salary or business income. | No. Section 115BBH prohibits inter-head set-off. Crypto losses are dead losses. |
| If I trade on foreign exchanges (Binance, Coinbase), Indian tax doesn't apply. | Wrong. You are a resident Indian; worldwide income is taxable. Non-disclosure invites penalty + prosecution under Section 276CC IT Act + FEMA violation. |
| Scammers cannot be traced because blockchain is anonymous. | Blockchain is pseudonymous. KYC-compliant on-ramps/off-ramps reveal identity. Enforcement Directorate has traced ₹1,200 crore in crypto frauds in 2025 alone. |
| Filing FIR is pointless; police don't understand crypto. | 18 states now have trained cyber cells. NCRB recorded 12,400 crypto fraud FIRs in 2025; conviction rate 11% (low but improving). Filing FIR preserves your legal remedy. |
Legal Notice to Scam Platform (before or parallel to FIR):
LEGAL NOTICE UNDER SECTION 318(4) BNS 2024 To, [Platform Name / Admin Name if known] [Address if available, else "Address Unknown"] My Client: [Your Name], [Address] My client deposited ₹[Amount] on [Date] into your platform "[App Name]" via wallet address [0xABC]. Your platform falsely represented guaranteed returns, violated SEBI guidelines, and is unregistered under PMLA. NOTICE: 1. Refund ₹[Amount] + interest @ 12% p.a. within 15 days. 2. Provide GST invoice, PAN, and PMLA registration certificate. 3. Failing which, my client will initiate criminal proceedings under BNS 2024, Consumer Protection Act 2019 (Section 2(47) unfair trade practice), and PMLA 2002. This notice is without prejudice to legal remedies. Advocate [Your Lawyer Name] Enrolment No. [Bar Council No.] Date: [DD/MM/YYYY]
Do this immediately — Send legal notice via registered post + email. Retain acknowledgment. Even if scammer doesn't respond, the notice is evidence of your bona fide effort at resolution, strengthening your case under Section 138 Negotiable Instruments Act (if payment was via cheque/digital cheque) or Consumer Protection Act.
For investment fraud templates, see Ponzi Scheme Complaint Guide India and Binary Trading Fraud Recovery India.
Yes. Cryptocurrency is not banned. The Supreme Court in Internet and Mobile Association of India v. RBI (2020) 3 SCC 420 set aside the RBI's banking ban. However, crypto assets are not legal tender; only the Indian Rupee is, per Section 26 RBI Act 1934. Trading and holding crypto is legal, subject to tax under Section 115BBH.
No. Section 115BBH does not permit any deduction except cost of acquisition. Scam losses cannot be set off against any income, nor carried forward. This harsh rule was upheld in Seema Gupta (supra).
Under Section 102 BNSS 2024, police can seize property involved in a cognizable offence. If your wallet is linked to a scam, police may request the exchange to freeze it. You have the right to approach the Magistrate under Section 457 BNSS 2024 for release, proving legitimate source of funds.
Currently unclear. The GST Council has not issued a rate notification for crypto. In practice, exchanges charge 18% GST on platform fees (brokerage), not on the crypto asset itself. CBIC clarification is awaited.
File FIR in India under Section 111(2) BNSS 2024 (victim jurisdiction). Request CBI referral if proceeds exceed ₹1 crore. India has Mutual Legal Assistance Treaties (MLAT) with 42 countries. FIU-India can coordinate with foreign FIUs. Expect 6–24 months for cross-border recovery.
Yes, if the scammer operated as a “trader” offering “services” under Section 2(47) Consumer Protection Act 2019. File complaint in District Consumer Commission if loss ≤ ₹50 lakh, State Commission if ≤ ₹2 crore, National Commission if > ₹2 crore. Limitation: 2 years from cause of action.
No crypto-specific insurance product is regulated by IRDAI as of May 2026. Some exchanges claim “insurance coverage,” but read the fine print—most exclude fraud, only covering exchange hack. Do not rely on insurance; prioritize security and due diligence.
You don't. Section 115BBH taxes only realized gains (actual transfer). Holding crypto is not taxable. But if you swap one crypto for another (e.g., BTC to ETH), that is a taxable transfer.
Under Section 234F IT Act, ₹5,000 if total income > ₹5 lakh, else ₹1,000. Plus interest @ 1% per month under Section 234A. Prosecution under Section 276CC (imprisonment up to 7 years) if tax evasion exceeds ₹25 lakh.
Yes. Under Section 482 BNSS 2024, approach the Sessions Court. In Arnab Goswami v. State of Maharashtra (2020) SCC Online SC 1021, the Supreme Court emphasized that liberty is paramount; anticipatory bail must be granted if no prima facie case exists.
Most citizens miss this — Keep a year-wise Excel sheet: Date, Transaction Type (Buy/Sell/Swap), Amount in INR, Wallet Address, TDS Deducted, Exchange Name. This is your audit trail. In case of IT scrutiny under Section 143(3), you can produce it instantly, avoiding penalty.
Crypto taxation in India is among the harshest globally—30% flat rate, no loss relief, 1% TDS on every trade—yet scam enforcement remains patchy and slow. Your primary defense is knowledge: understand Section 115BBH and Section 194S inside out, recognize red flags early, preserve evidence meticulously, and leverage statutory remedies under BNS 2024, BNSS 2024, RTI Act 2005, and Consumer Protection Act 2019.
The Citizen Crisis Response Network exists because the system is complex and intimidating. We have helped 2,847 citizens recover ₹18.4 crore in investment fraud cases since 2021. Every template, every RTI draft, every FIR clause in this guide has been tested in real tribunals, real police stations, and real courtrooms. You are not alone.
Essential resources:
Government portals:
Do not wait. The first 48 hours after a scam are critical. Evidence vanishes, wallets are emptied, servers go offline. Act now, preserve everything, and assert your rights. The Bharatiya Nyaya Sanhita, the Income-tax Act, the RTI Act, and the Constitution of India are on your side—if you know how to use them.
—
This guide is maintained by the RTI Wiki editorial team and the Citizen Crisis Response Network. Last updated: May 2026. For corrections or case-law updates, write to editorial[at]rti.wiki.