Indian Tax Authorities Investigating Ways To Collect Tax From Bitcoin Exchanges

Indian Tax Authorities Investigating Ways To Collect Tax From Bitcoin Exchanges

Bitcoin hit another all-time peak on Tuesday, two days after the launch of the first ever bitcoin futures on a US exchange as investors grew optimistic that the $20,000-mark is within reach.

The operations were led across six major cities - Bengaluru, New Delhi, Hyderabad, Kochi, Kolkata, and Gurugram - by the Bengaluru wing, under the Karnataka and Goa directorate of the department. India's tax authority fears that as Bitcoin popularity is growing at a rapid speed, it might trigger the creation of several e-Ponzi schemes and hence to safeguard investors against these risks, the tax department is investigating Bitcoin exchanges operating within the country.

The Income Tax (I-T) department is trying to find a way to tax bitcoin transactions, news agency Reuters reported on Wednesday quoting officials.

The survey teams were reportedly armed with an assortment of software tools to capture exchange data, including "cloning and mirror imaging", and identified the accounts of a number of high-net-worth individuals.

The central banks are in a great concern over this issue. "However, the operations are still on and final findings will emerge later", a senior official was quoted as saying.

The raids came days after India's central bank has warned people against investing in virtual currencies (VC) like Bitcoin. "The data is stored in cloud and some of the servers are located outside India but the tax authorities can mine information from the block chain and the Bitcoin wallets", said an official source.

In March this year, the government had said that use of virtual currencies like Bitcoins is not authorised by RBI and could result in breach of anti-money laundering provisions.

Read what other central banks are saying about digital currencies hereThe federal government has set up a panel headed by Economic Affairs Secretary Subhash Chandra Garg to decide on India's stand on virtual currencies, people with knowledge of the matter said on December 12.

The country's finance minister, Arun Jaitley, also recently clarified that the government does not recognize bitcoin as legal tender, adding that financial sector watchdogs and the government are working on "recommendations" to regulate the cryptocurrency.

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