Sunday, February 5, 2023

Income Tax Department In India Demand Trading Details From Crypto Exchanges

The Income Tax Department in India demanded the trade details from the crypto exchanges in the country to tax the profits they earned during the bull run.

A report published by Economic Times stated that the I-T department sent notices to three of the crypto exchanges, currently, asking them to provide all ledger entries to the government agency, so that, it could go through the price, time and number of digital currencies sold by the crypto trading platforms.

As per the report, this is a routine investigation that the I-T Department does to review whether everything is fine or not. In 2017, a similar notice was sent to exchanges and at that time, the price of Bitcoin reached an all-time high. 

The exchanges have also been asked to submit their financial details, however, it is being assumed that the main purpose of this process is to go through the details of the crypto-traders because the department already has information on trading platforms.

The traders, who invest in the stock market process their transactions through intermediaries, however, in the crypto market, the traders could directly place a buy/sell order on the trading platforms because they are the sole sources of information.

According to the crypto official, many traders in the market usually do not withdraw their money and transfer it to their bank accounts because they plan to buy a dip. Due to this, some of the profits they earned remain untaxed. 

The official further mentioned that the I-T department would want to check if the traders pay their full tax after the sale proceeds reach their bank account. 

“Tax on the sale of cryptocurrency is taxed at the full tax rate of 30% as such digital assets are not defined as ‘securities’ under the [under the Securities Contracts (Regulation) Act].”

On one hand, a few of the crypto investors are hurt due to the recent price volatility in cryptocurrencies, while on the other hand, some have earned a lot of profit, after the Supreme Court of India quashed the Reserve Bank Of India’s 2018 verdict of imposing a blanket ban on cryptocurrencies. 

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