Your BitCoin Fortune May Soon Be Taxed

The Income Tax Department of India may be looking for ways to tax the unregulated cryptocurrencies such as BitCoin. This suspicion arose due to the various surveys that the IT department conducted at nine of the BitCoin exchanges all across India. A spokesperson, Surbhi Ahluwalia, said that thousands of transaction take place at these unregulated exchanges all over the country every day and the department has conducted surveys in Delhi, Mumbai, Pune, Bengaluru, and Hyderabad. Ahluwalia also told Reuters that the department is collecting information about the working of the BitCoin exchanges, the investors, the source of the investment, and the possibility of collecting tax.

The survey was being conducted under Section 133A of the Income Tax Act and for “gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counter-parties, related bank accounts used, among others,” the officials said. The survey teams were armed with various financial data and inputs about the working of these exchanges and the department considered this as the biggest action that they have taken against the exchanges. The RBI has shown concern over the rapidly increasing value of BitCoin and the Government has set up a panel to decide India’s stand on cryptocurrency.

In November, the Supreme Court had issued notices to the Center and the RBI, seeking their response on the need to regulate cryptocurrencies in India. There have been reports that RBI and SEBI have been collaborating to form a policy in this regard. The RBI had previously issued a statement that anyone trading or investing in virtual currencies is doing so at their own risk, given the fact that RBI has not given any company a license or authorization to deal in such cryptocurrencies. The Union Finance Ministry had constituted an Inter-Disciplinary Committee in March to take stock of the present status of virtual currency both in India and globally and suggest measures for dealing with such currencies.