India's Tax Department Collects User Data at Multiple Bitcoin Exchanges

The Indian Income Tax Department has visited bitcoin exchanges across the country seeking data on tax avoiding users.

AccessTimeIconDec 14, 2017 at 10:00 a.m. UTC
Updated Sep 14, 2021 at 1:55 p.m. UTC

The Indian Income Tax Department has visited bitcoin exchanges across the country seeking to identify users.

The widespread operation is being carried out over suspicions of tax evasion by exchange customers, the Press Trust of India states. The agency visited nine cryptocurrency exchanges in cities including Delhi, Pune, Bengaluru, Hyderabad and Kochi.

According to tax department officials, the surveys – conducted under section 133A of the Indian Income Tax Act – were performed in order to collect the identities of digital currency investors, their transactions, the bank accounts used, emails, and other data.

The survey teams were reportedly armed with an assortment of software tools to capture exchange data, including "cloning and mirror imaging," and identified the accounts of a number of high-net-worth individuals.

A senior official at the department was cited as saying:

"Out of these, about 8-10 lakh [800,000-1,000,000] entities would be active for transactions. However, the operations are still on and final findings will emerge later."

The department said that it is also seeking cases where large amounts of "black money" had been laundered using bitcoin during the country's demonetization process in November 2016.

With the recent spike in the bitcoin prices, the country's central bank – the Reserve Bank of India – set the alarm bells ringing a week ago, cautioning "users, holders and traders" of cryptocurrencies over the perceived risks of involvement.

The country's finance minister, Arun Jaitley, also recently clarified that the government does not recognize bitcoin as legal tender, adding that financial sector watchdogs and the government are working on "recommendations" to regulate the cryptocurrency.

"The government's position is clear, we don't recognize this as legal currency as of now," he said at the time.

Indian currency and bitcoin image via Shutterstock

Edit: This article was amended to reflect that the department visits were surveys, not raids as previously stated.


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