Bitcoin Traders Targeted by India’s Income Tax Department

News, Regulation | December 21, 2017 By:

After surveying nine major cryptocurrency exchanges last week, the Income Tax Department of India is now set to issue notices to high net-worth individuals (HNI) across the country who invest in bitcoin.

The surveys were conducted across six major cities, including Delhi, Bengaluru, Hyderabad, Kochi and Gurugram. The department said that the surveys were undertaken for “gathering evidence for establishing the identity of investors and traders, the transaction undertaken by them, identity of counter-parties, and related bank accounts used, among others.”

The surveys revealed that out of the estimated 20 lakh (one hundred thousand) entities registered on these cryptocurrency exchanges, about 4 to 5 lakh were “operational” and indulging in transactions and investments. Those individuals and entities are now being probed under tax evasion charges.

“The department has collected a large number of documents, including customer’s credential verification papers, last week from the exchanges,” a senior official said. “After careful scrutiny, the department will start sending notices to the investors who have invested large sums in bitcoin. They will have to pay capital gains tax on the bitcoin investments and trade.”

The Reserve Bank of India, the country’s central bank, has so far issued three warnings about the potential risks of investing in bitcoin and other cryptocurrencies. However, at present, there are no regulations governing cryptocurrencies in the country.