There are a lot of people dealing in cryptocurrencies in India and after the government found it that $3.5 billion worth of transactions were conducted over a 17 month period, it has unleashed the tax man. The country’s income tax department has sent notices to thousands of cryptocurrency traders and investors asking them to pay tax on the capital gains.
Cryptocurrency trading remains unregulated in India where it attracts the young and tech-savvy crowd, real estate players, and even jewelers despite multiple warnings from the government comparing digital currency investments to Ponzi schemes.
Reuters reports that cryptocurrency trading attracts over 200,000 users per month who account for over $315 million worth of trading activity. People dealing in bitcoin and other virtual currencies have now been sent notices by the tax department to pay tax on the capital gains.
They’ve also been asked for more details about their total cryptocurrency holdings and the source of funds that were invested in digital currencies. A federal committee is looking into the possibility of imposing restrictions on cryptocurrencies in the country. India’s parliament might eventually legislate a regulatory regime as well.
It certainly won’t be the only country enacting legislation for monitoring digital currency exchanges. Countries like the United States, Japan, and South Korea have all been working on it.
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