Income Tax department to slap notices to 5 lakh Bitcoin investors

Within a week of surveying nine Bitcoin exchanges, the Income Tax (IT) department is gearing up to send notices to about 5 lakh high net-worth individuals (HNI's) across the country who were engaged in trading Bitcoin.

The surveys conducted last week by the Bengaluru-based wing of the Income Tax department reveals that about 2 million entities are registered across 9 exchanges. Out of which 4 to 5 lakh are operational and involved in transactions and investments.

Following the survey, the investigation team had submitted its finding to eight other such wings across the country for a detailed investigation. According to a PTI report, the findings contain information of the individual and organizations obtained from surveying exchanges.

The survey reportedly gathered evidence for establishing the identity of investors and traders, related parties, transactions details and accounts involved in trading virtual currencies.

Citing sources, the report mentions that about 4-5 lakh HNIs and their businesses are being issued notices to seek their relevant financial details, and tax them in case they evaded any taxation.

Since Bitcoin, Etherum and other virtual currencies are not recognised by the Indian government, it’s not clear how tax department officials will establish tax demand from cryptocurrency traders.

“Those individuals and entities whose records were recovered by the department are now being probed under tax evasion charges. Notices are being issued and they will have to pay capital gains tax on the bitcoin investments and trade,” said a source aware of the development to PTI.

Growth and increasing scanner on Bitcoin in India

This year Bitcoin is hogging headline every now and then for its unprecedented growth. In 2017, its price has increased by over a thousand per cent.

In December alone, the exchange rate for Bitcoin grew more than 25 per cent. Now one bitcoin is equal to Rs 12 lakh.

On Monday, to protect Indian investors from unlawful promises, market watchdog SEBI said it will take action against unlawful initial coin offers seeking public investment schemes with the promise of high returns from cryptocurrencies.