Attention bitcoin traders! The taxman is after you

Just a day after finance minister Arun Jaitley clarified that cryptocurrency is not legal in India, the chief of the Central Board of Direct Taxes (CBDT) has informed that the Income Tax Department will tax bitcoin trade.  

"It has come to the notice of the taxman that while many such investors did not pay advance tax on the benefits which they have accrued, some others have not explained these investments in their tax returns in the past," PTI quoted CBDT Chairman Sushil Chandra as saying. The department has issued notices to them and "they are in few lakhs", he added.

Finance minister Arun Jaitley, in his Budget speech on Thursday, stated that bitcoins or other crypto-currencies are not legal tender in India.

The value of bitcoin saw a growth of more than 1,700 percent in 2017 and this surge lured more investors towards it. 

"I believe the government is failing to understand that cryptocurrencies are not about speculation and trading but there's much more to it. Many cryptocurrencies like Cashaa & Ethereum have a strong use case especially for developing economies like India" Kumar Gaurav Founder and CEO of Cashaa said in an e-mail statement to IBTimes India. ''Government is presently in a state where they don't know what exactly is the right decision and approach towards regulating cryptocurrency. It has to be a dynamic approach and will change according to how markets adopt it,'' he added.

Last year, the taxman ran surveys on nine virtual currency exchanges in India to collect details regarding the transactions, parties involved and bank accounts used in cryptocurrency trading in India.

In December 2017, the finance ministry warned against investing in cryptocurrency and compared the virtual currencies to Ponzi schemes that offer high returns to the early investor.

Earlier this week, the social networking platform Facebook banned cryptocurrency advertisements pointing out that they are used to mislead potential customers.