New Delhi: The Income Tax Department has issued about one lakh notices to people, who have invested in cryptocurrencies like Bitcoin without declaring these in their income tax returns, a top official said on Tuesday.
"People who have made investments (in cryptocurrencies) and have not declared income while filing taxes, and have not paid tax on the profit earned by investing, we are sending them notices as we feel that it is all taxable," said Sushil Chandra, chairman of Central Board of Direct Taxes (CBDT) at an Associated Chambers of Commerce of India (ASSOCHAM) event here.
Chandra comment came at a time, when Finance Minister Arun Jaitley while presenting Budget 2018 in the Lok Sabha on February 1 said that all cryptocurrencies, which include bitcoins, are illegal and the government will take all measures to eliminate their use. Also, the virtual currencies values have been tumbling on worries about government regulation. Bitcoin fell to its lowest since November at $5,992 in the Hong Kong market in early trade on Tuesday.
According to Chandra, the I-T Department had conducted various surveys on cryptocurrency exchanges to understand how many people are regular contributors, how many had registered themselves and how many have traded on exchanges.
"We found out that there is no clarity on investments made by many people which means that they have not declared it properly.
"We have informed all the DGs (Director Generals of Income Tax) across India, they are issuing notices and so that would be taxed," he added.
He also said that as per income tax laws, money invested in virtual currencies would be taxable if the source is unexplained. Moreover, the profit gained on such investments is taxable.
"So we will tax that particular amount and they should pay tax on that," Chandra added.
In December last, the Indian government sounded the alarm on the phenomenon of cryptocurrencies, comparing them with the notorious Ponzi schemes floated to dupe gullible investors.
According to a Finance Ministry statement, which said that as virtual currencies were not backed by assets, their prices are entirely a "matter of mere speculation".
"Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes," it said.
It clarified that cryptocurrencies are not legal tender and do not have any regulatory permission or protection in India.
"The Government or Reserve Bank of India has not authorised any virtual currencies as a medium of exchange. Further, the government or any other regulator in India has not given license to any agency for working as an exchange or any other kind of intermediary for any virtual currency," the statement said.
According to investigation agencies here, with the demand and price of cryptocurrencies on the rise, cybercriminals have found innovative ways to dupe those looking to invest.
Bitcoins in India have been trading at more than Rs 10 lakh each, while people are investing amounts ranging from Rs 3,000 to several lakhs of rupees.
Bitcoin values in New York, for instance, have soared nearly 1,600 percent over the past year and have gone upwards of $15,000.
In December, cryptocurrency dealer Pluto Exchange announced the launch of India`s first mobile application for transacting in virtual currencies.
(With IANS inputs)