As India cracks down on cryptocurrency, 1 lakh notices sent to Bitcoin investors
New Delhi: As many as one lakh cryptocurrency investors have been slapped with notices from the Income Tax Department (I-T) for investing in virtual currencies without declaring these in their income tax returns, confirmed a top official. The revelation was made by Central Board of Direct Taxes (CBDT) Chairman Sunil Chandra at an event.
Chandra's statement comes at a time when the virtual currency industry is witnessing a large-scale meltdown, owing to regulations of governments around the globe. It may be noted that Bitcoin, the world's largest cryptocurrency, fell to its lowest Since November at $5,992 in Hong Kong market in early trade on Tuesday.
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"People who have made investments (in cryptocurrencies) and have not declared income while filing taxes, and have not paid tax on the profit earned by investing, we are sending them notices as we feel that it is all taxable," he said at an Assocham organised post-Budget seminar here.
The CBDT chairman went on to say that the I-T department has been conducting various surveys on matters related to cryptocurrency exchanges to fathom how many people are regular contributors, how many had themselves registered, and how many have already traded at major exchanges.
"We found out that there is no clarity on investments made by many people which means that they have not declared it properly. "We have informed all the DGs (Director Generals of Income Tax) across India, they are issuing notices and so that would be taxed," he added.
He also said that as per income tax laws, money invested in virtual currencies would be taxable if the source is unexplained. Moreover, the profit gained on such investments is taxable. "So we will tax that particular amount and they should pay tax on that," Chandra added.
In December last, the Indian government sounded the alarm on the phenomenon of cryptocurrencies, comparing them with the notorious Ponzi schemes floated to dupe gullible investors. A Finance Ministry statement said that as virtual currencies were not backed by assets, their prices are entirely a "matter of mere speculation".
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"Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes," it said. It clarified that cryptocurrencies are not legal tender and do not have any regulatory permission or protection in India.
"The Government or Reserve Bank of India has not authorised any virtual currencies as a medium of exchange. Further, the government or any other regulator in India has not given license to any agency for working as exchange or any other kind of intermediary for any virtual currency," the statement said.
According to investigation agencies here, with the demand and price of cryptocurrencies on the rise, cybercriminals have found innovative ways to dupe those looking to invest. Bitcoins in India have been trading at more than Rs 10 lakh each, while people are investing amounts ranging from Rs 3,000 to several lakhs of rupees.
Bitcoin values in New York, for instance, have soared nearly 1,600 percent over the past year and have gone upwards of $15,000. In December, cryptocurrency dealer Pluto Exchange announced the launch of India's first mobile application for transacting in virtual currencies.