India’s tax authority has revealed the issue of 100,000 tax notices to cryptocurrency investors that are suspected of hiding profits.
Finance minister, Aurun Jaitley, explained in the annual budget speech that India’s government is taking steps to wipe out the use of cryptocurrency for non-legal purposes. The chairman of the Central Board of Direct Taxes, Sushil Chandra, said: “We found out that there is no clarity on investments made by many people, which means that they have not declared it properly,” he went on to say “People who have made investments [in cryptocurrency] and have not paid tax on the profit earned by investing, we are sending them notices as we feel that it is all taxable,”
In India it is hard to purchase cryptocurrency on foreign exchanges due to the countries capital gains controls; as such the prices of cryptocurrency appreciate a premium price. However, this works both ways; international investors are unable to make use of the increased price when selling cryptocurrency.
The issue in India, is the same as most counties, the government does not want cryptocurrency to be used as a money laundering platform. Jaitley promised that the government would “take all measures to eliminate the use of these crypto assets in financing illegitimate activities”.
The Blockchain and Cryptocurrency Committee of the Internet and Mobile Association attempted to restore faith and confidence and replied: “It is our understanding that only currency notes and coins are legal tender . . . It must be emphasised that gold, stocks, bonds and other such assets are also not ‘legal tender’…We encourage the government to work with our members, as we are committed to detect, report, and eliminate suspicious transactions in pretty much the same way as other institutions do.”
Unsurprisingly, following Jaitley’s speech Bitcoin dropped 18.6%, however this is not too much when account is taken of the fact that Indian Bitcoin prices enjoy a premium of 12%.
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