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The worries and concerns coming from the trading and legality of Bitcoin had provoked the Income Tax department into taking an action. The Department has decided to issue notices of lakhs of high net worth individuals (HNI) who were involved in the trading of bitcoin in India. The department has taken this decision after conducting survey of nine major cryptocurrency exchange in India for the purpose of tax evasion.
The survey revealed that there are about 20 lakh registered entities and out of them about 4-5 lakh were operational and were indulged in the investment and transaction. These entities and individuals are now being charged for tax evasion.
The notices are being issued for seeking their financial details and if through those details demand for tax can be established the recipients of the notice will be liable to pay the capital gains tax on bitcoin investment and trading. For detail prone in the matter, the Bengaluru investigation wing of the tax department has dispatched the information to other eight other departments across the India.
The huge spike in the value of the virtual currency was not only the reason for the crackdown on the cryptocurrency exchanges under section 133 A of the Income Tax Act. The survey was also done because of suspicion of using of bitcoin post demonetisation for the conversion of black money into the white money.
As per the Inc42 Media, the initiative of the Income tax department is related to the investigation of the Panama papers and Paradise papers. The investigation of both the papers suspected that the black money involved as been converted into Bitcoins to be used as a safe passage.