Widening its probe into bitcoin ventures and trade, the Income Tax department is set to issue notices to 4 to 5 lakh high net-worth individuals (HNI) in the country who have been trading on the exchanges of the unregulated virtual currency.
The taxman has conducted studies at nine such exchanges last week to check cases of tax evasion. The Income Tax department, official sources said, found that out of the estimated 20 lakh entities registered on these exchanges, about 4 to 5 lakh were “operational” and indulging in transactions and investments.
Sources told PTI that the Bengaluru inspection wing of the tax department, which supervised previous week’s operations, has dispatched the info of the individuals and entities entirely on these directories to eight other such wings in the country for an in-depth probe.
“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,” a senior official privy to the operation said.
About 4-5 lakh HNIs and their companies are being given notices that may first seek their relevant financial details and eventually establish the taxes demand if any, he said.
As the bitcoins or virtual currencies (VCs) are illegitimate and unregulated in the country as of this moment, the Income Tax department has considered action according to the existing procedures, they said.
The survey functions conducted the other day, under section 133 A of the Income Tax Act, was carried out for “gathering information for creating the id of shareholders and merchants, the transaction performed by them, individuality of counter-parties, related loan company accounts used, amongst others,” they said.
A review action under the IT law pertains the tax officers making a surprise visit to the business enterprise premises of the get together under action, however, not their residential ones. The lead for the action is thought as the huge spike being listed in the worthiness of bitcoins and other virtual currencies recently.
Suspected black money being changed into white, post demonetisation, by using bitcoins was also under the department’s scanner, officials said.
Before this month, there is an outburst in the worthiness of a bitcoin. It increased from under USD 10,000 in the beginning of the year to near USD 20,000, before a sharpened 20 % dive within hours.
Bitcoin, a virtual money, is not controlled in the country and its flow is a cause for the matter of concern among central bankers around the world for a long time now.
The Reserve Bank of India (RBI) in addition has cautioned users, holders of virtual currencies. The federal government, in addition, has said that it does not recognise ‘crypto-currency‘ as legal tender in India.
In March, the Union finance ministry constituted an Inter-Disciplinary Committee for taking stock of the present status of virtual currencies both in India and internationally measures for dealing with them.
Source- Hindustan Times