Cryptocurrency Investors In India Received Tax Noticesbr>
The Income Tax Department of India has reportedly sent tax notices to cryptocurrency investors following a nationwide survey.
Last month, the tax department surveyed nine major cryptocurrency exchanges across six major cities, including Delhi, Bengaluru, Hyderabad, Kochi and Gurugram. 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.”
According to a recent report, the survey found that Indian crypto traders conducted more than $3.5 billion worth of trades and other transactions across a 17-month period. The department said that among those invested in bitcoin and other cryptocurrencies are tech-savvy young investors, real estate players, and jewelers. The tax notice asks crypto investors to provide details of their total cryptocurrency holdings and the source of their funds.
“We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality,” said B.R. Balakrishnan, a director general of investigations at the income tax department in Karnataka. “We found that investors were not reflecting it [cryptocurrency gains] on their tax returns and, in many cases, the investment was not accounted for.”
A key factor which helped the department track the total number of investors in the cryptocurrency market was the strong know-your-customer (KYC) followed by the currency exchanges. The tax department said that there are 2.5 million people registered to trade in cryptocurrencies in the country. But only 600,000 have provided the KYC details that are mandatory for trading, and only these people have traded on the exchanges.
Cryptocurrencies are not recognized as legal tender in India, but the governments’s official stance remains unclear. In November, the Indian Supreme Court admitted a public interest litigation (PIL) seeking clarity on the regulators’ and government’s stance on cryptocurrencies.
Dwaipayan Bhowmick, the petitioner, said that the lack of any concrete [control] mechanism pending the regulatory framework in bitcoin has left a vacuum. This has resulted in unaccountability, which led to unregulated trading and transactions.