India’s income tax department has reportedly issued tax notices to a number of cryptocurrency traders following a nationwide survey of cryptocurrency exchanges.
Speaking to Reuters, tax officials in India have revealed that the country’s citizens participated in over $3.5 billion in transactions and investments into cryptocurrencies like bitcoin, ethereum and ripple over a 17-month period leading up to 2018.
As reported in mid-December, Indian tax sleuths visited a number of exchanges to survey transactions and gather ‘evidence establishing the identity of investors and traders, transactions undertaken by them, identity of counterparties, [and] related bank accounts used, among others.” At the time, the authority said it was looking into instances of money laundering and tax evasion. Within a day of the on-site ‘surveys’, the IT (income tax) department confirmed its intention to collect taxes from investors.
Having amassed the data, the Indian government’s tax authority has now reportedly sent notices to “tens of thousands” of citizens invested in cryptocurrencies. In it, the government is asking adopters to file taxes on capital gains as well as seeking details of their ‘total holdings and the source of funds’, per the report, having seen one of the tax notices issued.
“We found that investors were not reflecting it on their tax returns and in many cases, the investment was not accounted for,” said director generation of investigations at the IT department B.R Balakrishnan.
India’s official stance on cryptocurrencies remains muddled in a space that has seen significant growth in adoption and awareness of cryptocurrencies by the country’s citizens in recent years. Domestic self-regulated cryptocurrency exchanges that follow KYC norms are adding some 200,000 new users every month – the latter ignoring repeated warnings from India’s central bank against investments in decentralized, peer-to-peer cryptocurrencies. Two court petitions have been filed to bring some clarity, one even leading to India’s Supreme Court pushing the government to cut through the ambiguity and propose a regulatory framework.
Supreme Court cybercrime lawyer Pavan Duggal suggested the government grant ‘limited legality’ to ensure they aren’t used in criminal activity, “considering cryptocurrencies are here to stay.”
The Indian government is, through an inter-departmental committee, working toward developing a framework for the legality and regulations of cryptocurrencies in the country. However, India’s IT department wasn’t keen on waiting for any guidance as it presses ahead to collect taxes.
“We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality,” Balakrishnan added.
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Last modified: March 4, 2021 5:03 PM