IT dept to issue notice to 4-5 lakh HNIs to probe into Bitcoin tradings

Strengthening its probe into bitcoin investments and trade, the Income Tax (IT) department is set to send notices to 4 to 5 lakh high net worth individuals (HNI) who were trading on this unregulated virtual currency across the country.

The Bengaluru wing of the tax department had conducted surveys at nine such exchanges last week to check instances of tax evasion. Official sources said that the department has found that out of the estimated 20 lakh entities registered on these exchanges, about 4 to 5 lakh were "operational" and indulging in transactions and investments.

The investigation team has now dispatched the information of the individuals and entities found on these exchanges to eight other such wings across the country for a detailed probe.

"Those individuals and entities whose records were recovered by the department are now being probed under tax evasion charges. Notices are being issued and they will have to pay capital gains tax on the bitcoin investments and trade," a senior official privy to the operation said.

About 4-5 lakh HNIs and their businesses are being issued notices which will first seek their relevant financial details and subsequently establish the tax demand, if any. Bitcoins or virtual currencies (VCs) are still illegal and unregulated in the country and in view of that the IT department has taken action.

The survey operations conducted last week, under section 133 A of the Income Tax Act, were undertaken for "gathering evidence for establishing the identity of investors and traders, the transaction undertaken by them, identity of counter-parties, related bank accounts used, among others," official sources said.

Suspected black money being converted into white, post demonetization, through the use of bitcoins was also under the department's scanner, officials said.

Tags: IT dept, Bitcoin tradings, bitcoin, income tax department, hni, high net worth individuals, unregulated virtual currency, tax evasion charges, black money, varindia