‘Bitcoin traders should be KYC compliant to prevent tax evasion’
On Wednesday, searches were conducted by the department in different cities including Pune. Bitcoin, a cryptocurrency, has been on the trading list for over eight years and marked the beginning of blockchain technology. It is in the limelight due to its sudden rise, prompting experts to say it is a bubble about to burst
Pune: While the Income Tax (I-T) Department has started searches on brokers of bitcoin across the country, experts say though bitcoin trading is not illegal, many traders could be involved in tax evasion.
On Wednesday, searches were conducted by the department in different cities including Pune. Bitcoin, a cryptocurrency, has been on the trading list for over eight years and marked the beginning of blockchain technology. It is in the limelight due to its sudden rise, prompting experts to say it is a bubble about to burst.
Commenting on the recent I-T searches, city- based chartered accountant Mohit Jain said the trade of bitcoin has suddenly increased. As per bitcoin trading websites the prices of bitcoin has increased by 200 per cent in last two months.
“Earlier bitcoin trading was on a small scale, but now given the rise in its trading, the I-T Department is worried about tax evasion and so has started searching for details with bitcoin brokers,” added Jain. He said it is possible to track defaulters. “For trading in bitcoin you have to go through a broker or mine bitcoins. For buying bitcoins, bank transactions will come into picture which can help track tax evaders. Bitcoin is not the only currency people are dealing with there are other cryptocurrencies too. As there are no companies accepting bitcoin in India there is no reason of its sudden rise in prices and so it appears to be a bubble which might burst.” added Jain.
Cyber expert Pankajj Ghode and Founder of Global Blockchain Foundation said over ten major cryptocurrencies including bitcoin and ethereum are in demand. “Trading in cryptocurrency is not illegal but evading tax is illegal and so the tax department is searching the bitcoin brokers. The brokers are supposed to maintain KYC details which will help to keep the transaction records and taxes to be paid. If KYC is not maintained, then tax defaulters will continue to remain free,” added Ghode. Speaking on blockchain technology, the cyber expert said managing cryptocurrency is just two percent of the entire blockchain technology. “The government is discussing the usage of blockchain technology as it ensures safe transactions. However, the Reserve Bank of India, Securities and Exchange Board of India and the government have not authorised any cryptocurrency. If such cryptocurrencies are not authorised, there are no regulations on the prices and so are not stable which points to that we should avoid investing in such currencies,” added Ghode.