The government had been monitoring cryptocurrency transactions since 2017, Central Board of Direct Taxes (CBDT) chairman JB Mohapatra said, adding that investors carrying out crypto transactions have not been declaring such income.

 

He further mentioned that many investors involved in virtual digital asset transactions had not been disclosing such income, and the income-tax department has collected enough data on such entities.

 

“In many of the cases tax returns were not filed, although they invest and they trade. In many cases the returns were filed, but the crypto surpluses were not declared…. In some cases where surplus was shown, there were major differences in accounting,” Mohapatra told ET.

 

The CBDT chief further mentioned that the government had carried out some non-mild intrusive service into 2017-18, 2019-20 and 2021 and there are special pilot projects being run on this theme, and it collected adequate good data, emphasising that this had given good data to the department on how to go with it in future.

 

The Centre will levy a 30 per cent tax on income from cryptocurrencies and other digital assets, Finance Minister Nirmala Sitharaman said while presenting the Budget 2022-23 on February 1.

 

Mohapatra clarified that while the Budget proposal to tax income from cryptocurrencies is sought to be implemented from April 1, it did not mean that there was no tax applicable for transactions before April 1.

 

“The fact that this is getting taxed on April 1, 2022 under the new regime at 30 per cent does not mean that the transactions which have been incurred earlier are not to be taxed,” the financial daily quoted him as saying.

 

Yet it was not clear under what head the department was going to tax transactions before Apri l 1.

 

The publication cited the CBDT chief as saying, “There is no statutory guidance or any section of the act or any direction from the CBDT as under what head it will be taxed, whether it will be income from business or income from other sources or capital gains or anything.” He, however, mentioned that the department will evaluate the nature of transactions and take a call on a case to case basis.

 

The Centre may intervene and issue directions on the matter if a need so arises, he said.

 

Citing industry estimates, global news agency Reuters mentioned that there is 1.5 crore to 2 crore crypto assets investors in India, with total crypto holdings of approximately Rs 40,000 crore ($5.37 billion). However, no official data is available on the size of the Indian virtual digital assets market.