Income Tax India has dispatched about 100,000 tax notices to citizens who have invested in virtual currencies. Given the exponential growth of the crypto market, the government wants these investors to share their profits as legal statutes require. The move fits within a broader plan to limit the use of digital currency.
Sushil Chandra, head of India’s direct taxes department, said:
“People who have made investments (in cryptocurrency) 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.”
Speaking during an event organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Chandra added:
“We found out that there is no clarity on investments made by many people, which means that they have not declared it properly.”
India’s income tax department came up with the tax orders last month after a national survey found that $3.5 billion worth of crypto transactions were made during a 17-month period.
The department had been keeping an eye on crypto investors since December 2017, when it began a surveillance program that reportedly found hundreds of thousands of wealthy individuals in crypto exchange databases.
At present, digital currencies are not officially recognized as legal tender in India, according to finance minister Arun Jaitley. He added that the government “will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
Even though digital currencies are not legal tender, as Chandra put it, the money invested in cryptocurrencies is taxable, and so is any return.
Ajeet Khurana, head of the Blockchain and Cryptocurrency Committee of India, said there are an estimated five million crypto users in India. He revealed that several crypto exchanges collaborated with the country’s tax department and offered personal data of relevant clients.
“All the exchanges very happily and voluntarily provided that information,” Khurana added.