According to reports, the income tax department in India has identified around 700 crypto investors in the country who have not paid taxes on some of the high-value transactions they have conducted involving digital currencies. An official hailing from the Central Board of Direct Taxation in the country said that they had a long list of people who were using crypto assets for conducting transactions, but had not paid the applicable taxes. The income tax department is now cracking down against everyone who has not paid the taxes that apply to their crypto gains. The department is also considering issuing notices to about 700 investors.
According to income tax officials, most of these crypto investors have either not bothered to file their tax returns, or have chosen to omit declaring the gains they have made via crypto transactions. It was further added that these people may have to pay 30% tax, along with interest and penalties. A senior official of the taxation department stated that of the total transactions, they have managed to shortlist about 700 of them that have a high tax liability. This list comprises of non-resident Indians, housewives, students, high net worth individuals as well as startups.
A number of these people have never filed their tax returns at all. The tax officials elaborated that some of these people actually have gains in excess of Rs 40 lakhs, but have either opted to declare their income as zero on their tax returns, or have not bothered to file them at all. Furthermore, it appears that the taxpayers are also using different ways to treat their crypto transactions on their tax returns. Some people have opted to list the gains as business income, while others have decided to declare it as capital gains. Last month, Nirmala Sitharaman, the Indian Finance Minister, said in her budget speech that a 30% tax would be applicable from the next fiscal year on capital gains from crypto.
The budget further added that there would be a flat tax applicable, regardless of how long the person has held the crypto assets in question. Not only will people have to comply with the tax rules that have been mentioned in the budget, but the tax officials also added that penalties may also be applicable. These could go as high as 50% above the tax that is already payable. Last month, the chairman of the CBDT, J. B. Mohapatra, said in an interview that there were a substantial number of crypto investors who had not declared their income.
He went on to say that the income tax department was collecting information on these individuals. According to him, the department plans on taking enforcement action against these people after March 31st. With that said, it is important to note that there is still no progress made on crypto regulation in the country. Even though the government has come up with tax laws for crypto assets, the currencies themselves are largely regulated and this could be a cause for concern.