A nationwide survey has revealed that, in last 17 months of period, people in India have invested in Bitcoin and other cryptocurrencies worth whopping US $3.5 billion. Seeing this, income tax (I-T) department has sent notices to tens of thousands of such people who have done trading in any of the cryptocurrencies, reported MoneyControl.
Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine cryptocurrency exchanges in Mumbai, Delhi, Bengaluru and Pune.
Despite government’s repeated warnings against cryptocurrency investment, people are trading in it at large, so much so that an industry estimated that trading in virtual currencies are adding 200,000 users in India every month.
B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of 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.
Moreover, it was found that people investing in cryptocurrencies like Bitcoin, Ethereum or Ripple are not accounting this activity at all and are not even reflecting such investment in their tax returns.
Thus, the tax department has asked people dealing in bitcoin and other cryptocurrencies to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.
Bitcoin, the world’s biggest cryptocurrency, soared more than 1,700 percent last year but later it crashed due China’s crackdown through ban on virtual currencies.
Despite of all this, to prevent people in investing in cryptocurrencies, an Indonesian blockchain startup announced recently that by end of this year it will a point-of-sale network so that people in India can do daily transaction using Bitcoin and other cryptocurrencies in offline mode as well.
In February this year, India’s leading bitcoin startups — Zebpay, Unocoin, Coinsecure and Searchtrade, jointly launched Digital Asset and Blockchain Foundation of India (DABFI) for the orderly and transparent growth of virtual currency market.
Thereafter, in November 2017, DABFI had announced its merger with the Internet and Mobile Association of India (IAMAI), the internet industry body now has the mandate to represent Blockchain startups in India. The new merged entity will.now be called as — IAMAI FinTech Council.