It had been reported last month that the Income Tax department of India was conducting an unconventional survey of cryptocurrency exchanges in major cities. During the operation, the government collected data from 9 significant exchanges regarding cryptocurrency transactions along with the details of pertaining traders.
Using the information collected through the survey, the Indian government has now issued tax notices to these cryptocurrency traders.
The exact number of individuals who received these tax notices remains unclear; however, it was reported by local news publications last month that government officials had gathered data for around 2.5 million high net worth entities, out of which 1 million were involved in active transactions.
The obtained information from cryptocurrency exchanges had also suggested that around $3.5 billion worth of transactions were performed over a period of 17 months.
This alludes to the possibility of these tax notices being issued to a significant number of Indian citizens.
What the tax notices are about
According to B.R. Balakrishnan, a senior director of the Indian income tax department, the tax notices were sent because the cryptocurrency investments and profits made from them were not being reported to the government by these traders, and thus this action had to be taken.
He further stated that it would have been “disastrous to wait”for any further action while waiting for regulations on cryptocurrencies.
India’s approach towards cryptocurrency
India’s stance towards cryptocurrency is being defined gradually.
The survey from last month and this very recent move of tax notices came after the Indian government started taking notice of the growing interest in cryptocurrencies within the country.
Even though India’s Finance Minister maintains that Bitcoin cannot be accepted as legal tender (which is in line with the approach of almost every other country on this planet), the government has been taking steps to acknowledge the cryptocurrency phenomenon spreading through their nation.
Ever since 2013, India’s central bank, The Reserve Bank of India, has been issuing notices that warn the country’s population about the risks involved with cryptocurrency trading.
One of the most recent notices had been issued only last month in December 2017, which referred their citizens to previous notices along with stating that they have not given licenses to any organization to trade cryptocurrencies, and warned them that, if they were trading cryptocurrencies, then they “will be doing so at their own risk.”
Furthermore, the Supreme Court of India had also responded to a filing earlier that requested for cryptocurrencies to have proper regulations. The ruling had directed different ministries to come together and collaborate on proposing regulations.
Global concerns about cryptocurrency regulation
India’s actions come in the midst of growing concerns from all over the world on cryptocurrencies.
While China has a strict approach to them now, South Korea is still in the process of employing effective regulations. The European Union passed collective legislations in December 2017 that pertained to active reporting on related transactions to eradicate the sense of anonymity that is associated with cryptocurrencies.
India’s stance on actual regulations remains unclear for now, but even if it implements its regulations in the next few months, it is possible that the country will take additional cues from the upcoming G20 summit in Argentina later this year, where France is reportedly going to discuss Bitcoin and cryptocurrency regulations.