Income Tax Department investigating evasion from crypto assets
The Department under the Central Board of Direct Taxes (CBDT) has identified such crypto transactions for verifications and has sent emails to defaulting persons to review their income tax returns
India had introduced a 30 per cent flat income tax on gains made from cryptocurrencies from April 2022 after inserting Section 115BBH in the Income Tax Act, 1961 by the Finance Act, 2022 (Representative image) The Income Tax Department is investigating tax evasion and laundering of unaccounted income by high-risk persons through investments in virtual digital assets (VDAs) after its data analytics showed “significant violations” of income tax rules by individuals in transactions involving crypto assets, sources said. The Department under the Central Board of Direct Taxes (CBDT) has identified such crypto transactions for verifications and has sent emails to defaulting persons to review their income tax returns (ITRs) to update any income that has not been properly declared on account of VDA transactions, they said.
“Data analytics has shown that a significant number of persons have violated provisions of Income-tax Act by not filing Schedule VDA of ITR and offering tax on the income earned at a lower rate or claiming cost indexation. ITRs filed by taxpayers are being verified with TDS returns filed by the Virtual Asset Service Providers (VASPs) popularly known as crypto exchanges and defaulters may be selected for further verification or scrutiny,” a source said.
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