As a nationwide survey revealed that more than $3.5 billion worth of transactions have been conducted over last one and a half year, the Income Tax department sent notices to ten thousand individuals who are dealing with such cryptocurrencies in India.
Tech-savvy young investors, real estate players, and jewelers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru, and Pune, a report said.
Last month, the Government has clarified those virtual currencies not legal tender in India. Post this, the Government has been giving repeated warnings against digital currency investments, saying these were like “Ponzi schemes” that offer unusually high returns to early investors.
But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month.
The tax department has asked people dealing in bitcoin and other virtual currencies such as ethereum and ripple to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.
Its huge gains have attracted the attention of global regulators tasked with protecting investors from fraud.
The biggest worry for New Delhi is how to protect investors trading on offshore exchanges.
