Income tax department surveys bitcoin exchanges

New Delhi/Mumbai: In a first, the income-tax department on Wednesday conducted surveys at bitcoin exchanges across the country.

A spokesperson for the department confirmed the development. Exchanges operating across the country, including those in Mumbai, Pune, Bengaluru, Delhi, Hyderabad and Gurugram, were surveyed.

Bitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, May 27, 2015. REUTERS/Benoit Tessier

It was undertaken to secure information about transactions, parties involved and bank accounts used as part of the authority’s broader efforts to profile and scrutinize assessees who pose a risk of tax evasion. Income-tax surveys or visits to the premises of an assessee are meant to gather information or documents such as books of account and, in some cases, to verify cash or other valuables.

The move comes at a time the government is taking measures to reduce use of cash in the economy and to encourage digital transactions, which are easier for the tax authority to monitor as financial institutions like banks and broking houses are required to report those.

The government and the Reserve Bank of India (RBI) are not regulating cryptocurrency at the moment and the tax department wants to ensure gains from dealing in this instrument are not suppressed. One of the concerns of the central bank is that the anonymity surrounding the counter-party in virtual currency transactions may expose its users to unintentional involvement in money laundering or terror financing.

Repeated calls and messages sent to the top bitcoin exchanges and bitcoin firms including Zebpay, Coinsecure and Unocoin remained unanswered.

Sreekanth C.S., chief operating officer, Coinome, a BillDesk-backed cryptocurrency exchange launched in November this year, said he was not aware of any I-T department survey. “I am not very sure who the I-T department is targeting,” he said.

Created in 2009, bitcoin is the most popular cryptocurrency and has the largest market cap currently. According to coinmarketcap.com, the current marketcap of bitcoins stand at $287 billion. Bitcoin doesn’t have any underlying assets and derives value from use. On Wednesday, the bitcoin price crossed $17,000. In the last one year, price of bitcoin has increased over 21 times.

RBI cautioned the public on 5 December about the potential economic, financial, operational, legal, customer protection and security-related risks associated with dealing in virtual currency. The central bank said it has not given any “licence/authorization to any entity/company to operate such schemes or deal with bitcoin or any virtual currency”.

The finance ministry too set up a committee in April to review the global regulatory systems covering virtual currency and the steps India needed to undertake to protect consumers and prevent money laundering.

Gautam Nayak, a Mumbai-based chartered accountant, explained that income tax will have to be paid on any gains accruing from a cryptocurrency transaction. The tax department is likely to ask investors and traders if their virtual currency transactions were reported or not. “This could be for transactions up to March 2017. For the current financial year, one still has time to file the tax return,” Nayak said.

Source : http://www.livemint.com/Money/ubKaynMm1JKkoJUa0voi3M/Income-tax-department-conducts-surveys-at-Bitcoin-exchanges.html

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