New Delhi: Reserve bank of India last week, had issued a warning that Indians should stay away from investing in Bitcoin as the investment in the same is considered invalid. Through the medium of Bitcoin, possibility of tax evasion on a large scale is thought to occur. On the background of this, the Income Tax Department took action on various ‘Bitcoin Exchanges’ and raided some places. This is the first major action of its kind that the Income Tax Department has taken on Bitcoin exchange.
There were raids by The Income Tax department on Wednesday in Delhi, Bangalore, Cochin and Gurugram on Bitcoin exchanges. This action was taken by the Income Tax Department under the section ‘133 A’ of the Income Tax Act. These raids were done to know the identity and details of those investing and carrying out trade of Bitcoin and the associated bank accounts and other such relevant information related to such activities.
In the near future other parts of the country also may have to see such raids. It is suspected that through the medium of Bitcoin, large scale tax evasion is taking place. Hence the details of such tax evaders are being tracked down through such raids. The information and details thus gathered shall be helpful to take appropriate action in future. Finance Minister and Minister of Corporate Affairs, Arun Jaitley clearly stated that Bitcoin has not yet been assigned any legal status. Similarly, a committee dealing in such finance related transactions has done a survey, and has submitted a report to the Finance Ministry.
The Reserve Bank of India, in the last week, cautioned the Indian investors when the value of the Bitcoin soared to a high of two thousand dollars in just two days stating that “The bubble of the exorbitant rise in the price of Bitcoin may burst anytime. RBI has not given the permit for Bitcoin trading. And hence the investors cautioned to do the trading at their own risk.”
The rate of the Bitcoins is escalating every day, making new records. Last week the price of the bitcoins was 15 thousand dollars which has now crossed 17 thousand dollars. There is a possibility that these prices will mount even higher. This is the reason why Bitcoin is attracting investors from all over the globe, which includes Indians as well. These raids certainly show that the Income Tax Department has started to look at this issue as a concern.