Income Tax Dept Conducts Surveys of 9 Bitcoin Exchanges in India

The surveys were to “gather evidence” for establishing the identity of investors, traders and the accounts used.

The Income Tax Department’s “survey operations” come after warnings from the RBI to avoid trading in Bitcoin in India

(Photo: The Quint)

The Income Tax Department on Wednesday, 13 December, conducted survey operations at major Bitcoin exchanges across India on suspicions of alleged tax evasion, official sources said.

They said various teams of the sleuths of the department, under the command of the Bengaluru investigation wing visited the premises of nine exchanges in the country including in Delhi, Bengaluru, Hyderabad, Kochi, Pune, Ghaziabad, and Gurugram, since early Wednesday morning.

The survey, under Section 133A of the Income Tax Act, is being conducted for "gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counterparties, related bank accounts used, among others," they said.

The survey teams, sources said, are armed with various financial data and inputs about the working of these exchanges and this is the first big action against them in the country.

Bitcoin, a virtual currency, is not regulated in the country and its circulation has been a cause of concern among central bankers the world over for quite a while now. The Reserve Bank of India had issued a caution against trading in bitcoin and cryptocurrency earlier in the year as well.

There is no underlying or backing of any asset for Virtual Currencies (VCs). As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value. In the wake of significant spurt in the valuation of many Virtual Currencies(VCs) and a rapid growth in Initial Coin Offerings (ICOs), the RBI reiterates the concern.

Reserve Bank of India Statement

In March, the Union finance ministry had constituted an Inter-Disciplinary Committee to take stock of the present status of VCs both in India and globally and suggest measures for dealing with such currencies.

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