Taxman Asks Crypto Exchanges For Business Information

[ad_1]

The tax office researched all trading details of the cryptocurrency exchanges, along with their financial data, to capture the profits made during the year-long bull run in the tax net.

A fortnight ago, the Income Tax (IT) department sent notices to at least three exchanges asking them to share all ledger entries to find out the price, time, and number of parts sold by a trader.

The tax department requested similar information in December 2017 when Bitcoin, the most well-known cryptocurrency, hit a new high.

“It is a routine action to collect information and verify activity – especially since we have become anonymous (…) to check if things are going well,” said a senior tax official. For a large number of taxpayers, the ministry has migrated to a “faceless assessment” process via electronic mode.

“The department also asked us to provide the financial data of the exchange. But we believe that the focus can be on users (ie traders) because they already have information about the exchanges. “said an executive from one of the exchanges.

For crypto transactions, exchanges are the only source of this information. In stock transactions, the department can compare financial transaction details submitted by brokers with the respective statements filed by investors. However, unlike stock trades, cryptocurrency trades do not require a broker or intermediary – traders placing buy or sell orders directly on the exchange platform.

“Many crypto traders cannot withdraw the money and transfer the proceeds from the sale to their bank accounts. They can let the money sit with the exchange so they can buy as soon as the crypto prices drop. . In the process, some profits may not be taxed, “another exchange official said. “Additionally, the IT department may want to verify whether the full tax is paid after funds received from the sale have been transferred to a merchant’s bank account,” the person said.

Since crypto is not recognized as a “security” (under the Securities Contracts (Regulation) Act), the gain from the sale of crypto is taxed at the full rate of over 30% – up from 15% d short-term capital gains tax on the sale of shares.

While many traders and late entrants have been hit by crypto price volatility, some who may be riding the bullish phase in the past fiscal year have made a killing. The crypto rally in India was sparked by the March 2020 Supreme Court ruling that overturned the Reserve Bank of India’s April 2018 directive banning banks and financial companies from dealing in “virtual currencies” or ” provide services to facilitate “anyone” dealing or settling “in these digital currencies.

The closely followed Bitcoin price crossed $ 60,000 a coin in April 2021 in the international market, but is now slightly below $ 30,000. The Bitcoin race over the past decade has fascinated traders: From just $ 3.50 in 2011, digital assets grew to over $ 19,700 in December 2017, dropping to around $ 3,300 a year later. , before rising again in the midst of a raging pandemic.

Also Read: ED Position Strikes at Heart of Cryptocurrency in India

[ad_2]