Finance Minister Arun Jaitley created quite a controversy when he said that cryptocurrencies are not legal tender during his Budget 2018 speech. The government has now confirmed that it has sent 10 million notices to investors in cryptocurrencies.
“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,” Sushil Chandra, Chairman, Central Board of Direct Taxes said at an industry event.
According to Mint, Chandra also added that surveys have been done on cryptocurrency exchanges to find out how many people were regular contributors and how many have registered themselves. CBDT has also surveyed how many people have traded on these platforms.
He also clarified that the department had found that there was no clarity on investments made by many people further implying they had not declared them. The income tax law states that whatever money one is investing in cryptocurrency, it would be taxable if it is unexplained. Even the profit earned on the investment is taxable.
Cryptocurrencies like Bitcoin, Ethereum and Ripple have gone up multiple folds in terms of value last year but regulators globally have been raising questions on the legality of their tender. Jamie Dimon, CEO, JP Morgan once went as far as calling it as a fraud and recently confirmed that he regrets the statement.
“Tax authorities are not cryptocurrency regulatory authorities and are primarily the taxation authority. They do not decide on the regulation of cryptocurrency. Whether or not cryptocurreny trading must be allowed, falls under the purview of RBI / SEBI / Finance Ministry. Therefore, this move will only affect investors who have not declared their gains through cryptocurrency trading, and will not have any implications on cryptocurrency trading in India,” Vishal Gupta, Founder & CEO – SearchTrade.com & Co-founder – DABFI said about the larger implications for cryptocurrency trading in India.
While cryptocurrencies are being questioned for legal tender, regulators around the world are understanding the significance of blockchain technology, the ledger module that removes intermediaries from the equation. During his budget speech, the FM added the government will explore use of blockchain technology in its push towards digital economy.