Bitcoin Exchanges Raided By India’s Income Tax Department

News | December 14, 2017 By:

The Income Tax Department of India has conducted surveys on nine major bitcoin exchanges in the country amid bitcoin’s recent explosive price surge.

The bitcoin exchanges were raided under the command of the Bengaluru investigation wing. Surveys were conducted across six major cities, including Delhi, Bengaluru, Hyderabad, Kochi and Gurugram. According to a Central Board of Direct Taxes official, the surveys are aimed at ascertaining the source of funds and tax evasion, if any, following recent reports of large-scale cash-outs of cryptocurrencies.

“The survey, under Section 133A of the Income Tax Act, is being conducted for gathering evidence for establishing the identity of investors and traders, transactions undertaken by them, identity of counterparties, related bank accounts used, among others,” the official said.

Income Tax Department spokeswoman Surbhi Ahluwalia said that they are looking at collecting information about the modus-operandi of bitcoin exchanges, investors, their source of investment, and possibility of collecting tax.

The move came after the Reserve Bank of India (RBI) issued a second warning on the risks of digital currencies. The central bank said it was concerned about the cryptocurrency just days after bitcoin hit a record high of just under $12,000, stoking fears that a rapidly swelling bubble could burst.

Last month, a bench headed by Chief Justice Dipak Misra issued notice to the ministries of Finance, Law and Justice, Information Technology, market regulator SEBI, and the RBI on the plea which sought creation of a panel to frame a mechanism to regulate the flow of bitcoin.

The plea claimed that despite the RBI’s call for caution against the use of digital currencies, domestic bitcoin exchange have been adding over 2,500 users a day and has reached 5 lakh downloads.