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By Siri Bulusu
India’s tax department has sent out 100,000 notices to cryptocurrency investors in a effort to recover income taxes owed on their profits.
The Central Board of Excise and Customs Chairman Sushil Chandra confirmed the information in a Feb. 6 address to a business and industry lobby group.
The notices were sent to individuals who didn’t declare in tax filings the profits from the sale of cryptocurrency, such as bitcoin.
“We found out that there is no clarity on investments made by many people which means that they have not declared it properly,” Chandra said. “We feel that it is all taxable.”
The Associated Chambers of Commerce and Industry is based in New Delhi and has the membership of 400 industry and trade groups. The CBDT confirmed the Feb. 6 comments to Bloomberg Tax.
The tax notices come on the heels of India’s minister of finance telling parliament in the budget 2018 speech that the government aims to curb illegal cryptocurrency activity.
“The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,” Finance Minter Arun Jaitley told parliament Feb. 1.
The Central Board of Direct Taxes has conducted surveys in the past month to determine the number and value of cryptocurrency investments and to gather information on investors, a CBDT spokesperson told Bloomberg Tax on Feb. 6.
The spokesperson said it is too early to make guesses about how the notices will be received by cryptocurrency investors and declined to comment on figures from the official CBDT surveys.
Exchanges currently operating don’t need to shut down, though the government is taking a strong stand against illegal activity, Pallav Narang, a partner at the chartered accounting firm Arkay & Arkay, told Bloomberg Tax on Feb. 6.
“The onus is now on these investors to prove where the money came from and prove that they have been attempting to pay tax on the income as capital gains, business income or as income from other sources,” Narang said.
The government could decide to classify cryptocurrencies as “goods” or “services,” making it taxable under the Goods and Services Tax regime, or as a security which would subject profits to long or short-term capital gains tax, Narang said.
“There are different interpretations of cryptocurrencies and arguments can be made under different headings in tax returns, so there will be some amount of leeway for investors reporting income in returns already,” Narang said.
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