The Income Tax Department of India is issuing alerts around high-value crypto transactions. The matter came to light earlier this week when Punit Agarwal observed a rise in income tax-related queries tied to crypto transactions from the income tax department. Agarwal is the founder of KoinX, a firm that provides crypto tax management solutions in India. Essentially, Agarwal has conveyed to the Indian crypto investors that the government is maintaining a strict oversight on all tax-work related to crypto transactions in India.
Agarwal says that the Indian government is automating the process of validating and verifying the returns on crypto incomes to avoid any flaws in calculations.
For people to avoid attracting penalties on high-value transactions, Agarwal has strongly advised taxpayers to file their taxes accurately and verify data in the ITR filing against the Annual Information Statement (AIS) to catch any prevailing discrepancies.
“Income Tax portal matches the transactions appearing in AIS and the data filed by users. In-case the authorities find any discrepancies, then they issue a notification to the user to re-check if they have missed anything or if everything is in-line. For people, if they find any discrepancies in their income reported vs income generated, then they have to file a revised return. Also, they need to give an explanation to the notification. In case everything is in-line and as expected, people can just submit the feedback mentioning they confirm everything is fine,” Agarwal told Gadgets360.
In the absence of a set rulebook for crypto, India levied taxes on crypto profits last April hoping to be able to maintain some track record of crypto transactions, most of which are largely anonymous.
The country levies a 30 percent tax on crypto incomes and also cuts one percent TDS on each crypto transaction – aiming to identify potential defaulters and suspicious crypto holders, who could be engaging in unlawful activities like money laundering or terror financing.
From what Agarwal shared on X, however, does show the strict oversight that the Indian income tax department is indeed maintaining over the crypto sector.
:loudspeaker: :rotating_light:Important Announcement from KoinX: Handling Income Tax :flag-in:Queries for Crypto Transactions.
We recently noticed a rise in Income tax queries & raids on matters related to crypto transactions.
Here’s a detailed thread on how to handle such queries:thread::point_down: pic.twitter.com/o8VdP5k9PW
— KoinX (@getkoinx) December 26, 2023
Given the confusion around filing crypto taxes, only 0.07 percent crypto holders in India reportedly paid their taxes last year.
Players like KoinX are trying to extend all the support required for people to file their crypto taxes because industry analysts believe that adhering to this tax regime can instil faith of the Indian government on the Web3 sector which will eventually result in its overall growth.
Taxnodes, another crypto tax solutions provider, has decided to offer complimentary NFTs as incentives to taxpayers using its platform to file their taxes.