Indian Tax Agency Targets Rich Bitcoin Investors

Indian officials cited a rise in the popularity of cryptocurrencies in the country as a signal to start investigations by the government.

Reports coming from India on December 18, indicated that the country’s Income Tax Department has readied itself to issue notices to several cryptocurrency buyers.

Sources said that high-net-­worth individuals or HNIs should expect a visit from the taxman. These sources added that after closely watching 2 million registered entities, the tax department spotted around four to five hundred thousand individuals that actively transact and invest in cryptocurrencies. A senior official with knowledge on the tax authority’s plan said:

“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.”

He added that HNIs and their respective businesses are now subject for auditing and must submit their financial information to serve as reference for tax assessment purposes. The official insisted that cryptocurrencies lack regulation and are currently considered illegal in the country. For itself, the Income Tax Department bases its crackdown on existing provisions, namely section 133 A of the Income Tax Act, which allows, “gathering evidence for establishing the identity of investors and traders, the transaction undertaken by them, identity of counter-parties, related bank accounts used, among others.”

Another aspect of the law permits officials to perform surprise inspections on businesses that are under investigation but not on residential addresses in India.