New Delhi: The income-tax department has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said.
Tech-savvy investors, real estate players and jewelers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges across India.
Governments around the world are grappling with how to regulate cryptocurrency trading, and policymakers are expected to discuss the matter at a G20 summit in Argentina in March.
The Indian government has issued repeated warnings against digital currency investments, saying these were like “Ponzi schemes” that offer unusually high returns to early investors.
But it has not so far imposed curbs on an industry estimated to be adding 2 lakh users in India every month.
B.R. Balakrishnan, a director-general of investigations at the income tax department in Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade. “We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality,” he told Reuters.
The tax department has asked people dealing in bitcoin and other virtual currencies such as Ethereum and Ripple to pay tax on the capital gains. It also asked for details about their total holdings and the source of funds in the tax notice.
