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ED plans to probe Bitcoin exchanges across the country

Taxman and ED are currently pondering upon whether Bitcoin should be treated as a currency or as a commodity

BS Web & Agencies  |  New Delhi 

ED to probe Bitcoin
Photo: Reuters

Further tightening its grip on the blockbuster of the century, has plans to probe exchanges to check for any violation of Foreign Exchange rules, Livemint reported quoting two officials from the ED. Prior to this, the on December 13, conducted surveys in Delhi, Mumbai, and Hyderabad. I-T investigative teams began surveys to gather information related to the dealer’s source of income, bank accounts, and tax liability, among others, amid tax evasion concerns Business Standard had reported. Although a clarification from the government on regulation and taxation is awaited, a source in the I-T department said capital gains tax must be paid on profits made from the sale of “Bitcoins are not recognised as currency. So, capital gains tax liability arises at the time of sale of bitcoins on gains made on it, whether held for short-term or long-term.

They are not tax exempt,” the official said. Taxman and ED are currently pondering upon whether should be treated as a currency or as a commodity, both of which will constitute seperate violations in the tax net. If the is to be treated as a currency, then the traders and exchanges will be violating the provisions of the act, one of the official quoted by Livemint said. However, if is to be treated as an investment commodity then the exchanges and traders will have to pay on it. Speaking at a CII Financial Markets Summit, Ajay Tyagi, chairman of Sebi, said: "does not pose a systemic risk right now but the area can't be ignored. The ministries of finance and information technology are looking into it, in consultation with the Reserve Bank of India (RBI)" Business standard had reported on Wednesday. Also read: I-T issue notices to 400,000 HNIs across India Finance Minister Arun Jaitley had said last week that India does not recognise as legal currency 'as of now'. The has on three occasions warned against investing in bitcoins. "As such, any user, holder, investor, trader, etc, dealing with virtual currencies will be doing so at their own risk,” it said on an earlier occasion, BS had reported earlier. Earlier this month, there was a spurt in the value of a It rose from under USD 10,000 at start of the year to close to USD 20,000, before a sharp 20 per cent plunge within hours.

First Published: Fri, December 22 2017. 17:49 IST