The Income Tax Department of India has started issuing tax notices to crypto investors who failed to report their transactions from previous financial years. This action is part of a broader effort to enhance control over Virtual Digital Assets (VDAs) in the country. The department is utilizing tools like the Insight Portal and CRIU risk engine to identify mismatches between reported income and exchange data, leading to potential discrepancies. These notices serve as show-cause notices, allowing investors to clarify any differences with appropriate documentation. The initiative reflects a tightening of crypto tax enforcement, with the government emphasizing the need for transparency and compliance in the reporting of digital assets. Proposed regulations in the Union Budget 2026 aim to impose penalties for inaccurate reporting of crypto transactions, aligning digital assets more closely with the country's financial standards. As enforcement becomes increasingly data-driven, investors are likely to face heightened scrutiny regarding their past and future transactions.