Friday, December 2, 2022

Breaking: Indian Government Issuing Crackdown on Crypto Users

Breaking: Indian Government Issuing Crackdown on Crypto Users

The Indian Income Tax Department is planning to send out notices to a half million High Networth Individuals (HNI) that are involved in trading cryptocurrencies in the nation. This move came following last week’s taxation raid at nine virtual currency exchanges.

Also read: European Union Rushes to Regulate Bitcoin, With France Leading the Way

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Starting to Get Ugly

Days ago, officials of the Income Tax Department of India (ITDI) carried out raids on Indian cryptocurrency exchanges on suspicions of tax evasion.

Unsurprisingly, Indian crypto investors are on edge, as domestic users just had their registration details caught up in the ITDI’s ever-constricting net.

The increasing anti-Bitcoin situation in India, then, is a far cry from the regulatory liberalization taking place in some Western nations. As Americans enjoy buying Bitcoin futures launched by CME and CBOE futures exchanges, Indian entrepreneurs can no longer even get mining equipment imported into India.

Tax Haven for Investors?

In the wake of the national exchange raids, it became clear the crackdowns were undertaken to gather information on Indian citizens that trade large sums of bitcoins.

As one ITDI official remarked:

“Those individuals and entities whose records were recovered by the department are now being probed under tax evasion charges. Notices are being issued and they will have to pay capital gains tax on the bitcoin investments and trade.”

The top domestic financial watchdogs, Reserve Bank of Indiea (RBI) and Securities and Exchange Board of India (SEBI), are concerned that the current lack of an adequate legal framework to regulate digital currencies will give rise to “e-Ponzi” schemes. According to the agencies, scammers can too easily take advantage of the gap in monitoring cryptocurrencies.

In the very least, that’s the “official” line.

Bitcoin Gains Liable for Taxation

Additionally, the SEBI has announced a formal investigation into Initial Coin Offerings (ICOs), the novel fundraising model that the regulatory body officially refers to as “Ponzi Schemes.”

On that point, a SEBI official remarked:

“SEBI cannot allow gullible investors to be taken for a ride with unlawful promises by these exchanges and those claiming to ‘mint’ cryptocurrencies. A number of them are suspected to be indulging in fraudulent activities without actually minting any such virtual currencies that require very complex algorithms.”

As for the nitty-gritty tax implications, recently the Indian government said crypto investors would incur a 20 to 30 percent tax on bitcoin gains.

SEBI headquarters is a bit more menacing now for Indian Bitcoiners.

Moreover, the Indian government is still unsure whether it should consider cryptocurrencies as a legal payment or as an asset. As it stands, trading in cryptocurrencies is not explicitly illegal in the nation, but at the same time, nor is it explicitly legal.

Through the ambiguity though, Indian officials are seemingly in the beginning stages of a much larger offensive against domestic cryptocurrency users.

And other governments around the world are also expressing increased concerns about bitcoin’s illicit use cases.

To that end, France’s Finance Minister just urged G20 nations to prepare global laws to monitor cryptocurrencies. India is notably a member state of the G20 bloc, so the Indian government will have a seat at the bargaining table.

*NOTE: This is a screenshot of a fresh notice allegedly sent from a leaker within the ITDI. The author received it in a local group from a peer. Bitsonline is still working to verify its authenticity. 


What do you think? Is this crackdown a sign of further governmental restrictions to come across the globe? Sound off in the comments below. 

Images via moneycontrol, Sirfnews

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