Will the government know if I don’t record profits made on crypto?

The answer to this question is very tricky.

Suppose you trade in various exchanges and also earn profits in them, in this case the answer will be yes, the government will be able to see your profits made on those exchanges. It is because of the 1%TDS which was levied by the government on cryptocurrencies to track transactions done on the exchanges. Exchanges keep a record of your transaction details and the government can see right through it. In this way they can also keep a record of your profit details.

Now, suppose you trade with your friend or family without any help from the exchange or any middleman. Then there won’t be any details of your transactions so you can avoid the TDS and hence, also the government. But, the government is building a more secure system to fill this loophole and planning on building more laws regarding crypto regulation.