Income tax department can get notice from hiding profit from cryptocurrency

The new Income Tax Bill has increased the scope of the definition of virtual digital assets (VDAS). It will now also include crypto assets as it represents that value digitally, then a cryptographic secured distributed laser. VDAS has been included in the scope of the definition of ‘undeclared income’ for searching and seizure of the Income Tax Department.

These changes were announced in this year’s budget. According to a media report, this will allow innovative digital assets such as utility toilets, security tocons and crypto derivatives to capture taxes. This year’s Finance Bill has been proposed to make reporting of such crypto assets necessary like a statement of financial transactions. The taxpayer can get notice from the Income Tax Department for hiding the profit from VDAS under the Finance Act, 2022.

In some countries, regulations are being made about this segment. The central government’s stand on cryptocurrency in India is strict. There has also been a demand by the Reserve Bank of India (RBI) to ban this segment. Recently, the Economic Affairs Secretary, Ajay Seth had said that the government’s stand on cryptocurrency is being reviewed. He had said, “Some countries have changed their attitude in terms of using cryptocurrency, their acceptance and importance. We are reviewing the discussion paper again.” He said that there are no borders for such assets and due to this India’s attitude cannot be unilateral.

Earlier this month, the US Securities and Exchange Commission (SEC) reported that a task force has been formed with the objective of creating a regulatory framework for cryptocurrency. Trading has increased in Cryptocurrency despite more taxes in India. The country’s Financial Intelligence Unit (FIU) had given show cause notices to some foreign crypto exchanges for not following the rules. In June last year, the binance included in large crypto exchanges was fined more than $ 2 million. After this, Binance also registered with FIU to resume its business in the country.