India sends 0.1m income tax notices to Bitcoin investors

NEW DELHI: The Indian Income Tax Department has issued about 100,000 notices to people who have invested in cryptocurrencies like Bitcoin without declaring these in their income tax returns, a top official said on Tuesday.

The revelation by Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra at an Assocham event comes at a time when 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. "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," he said at an Assocham organised post-budget seminar.

According to Chandra, the Income Tax 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. 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. It clarified that cryptocurrencies are not legal tender and do not have any regulatory permission or protection in India.