Govt. wants Taxes: Cryptocurrency users under IT scanner

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The income tax department has started issuing notices to the people who have invested in cryptocurrencies but have not declared income and profits earned from the digital currency like Bitcoin and Litecoin. Since there is no clarity on the investment made by commoners in cryptocurrencies, people did not declare the income from these while filing taxes and hence, did not pay taxes as well.

The I-T department has informed all the director generals of income tax across the country to issue notices to such people. Cryptocurrency is digital currency where encryption techniques are used to oversee the generation of currency and verify the transfer of funds in a decentralized manner.

This comes a few days after finance minister Arun Jaitley had said that cryptocurrencies are not legal tender in India and that the government will be working towards eliminating the illegitimate use of this currency, given that it can be used for terrorist funding.

Meanwhile, Indian government wants to leverage the Blockchain technology (on which cryptocurrencies are based) in a bid to grow the idea of digital economy.

The government is also working on a framework to regulate cryptocurrency by the end of this financial year and had formed a committee to study the impact of cryptocurrencies to make recommendations.

Due to regulatory challenges (not only in India but the U.S. as well), Bitcoin is currently at its lowest level since October and is showing little signs of recovery. Alternative cryptocurrencies like Ripple and Litecoin are also witnessing a downfall.

According to Coinmarketcap, cryptocurrencies have lost more than $500 billion of market value since early January amid government clampdown and growing investor concern.

In fact, social media website Facebook on 31 January also cracked down on cryptocurrencies by announcing that it was banning all ads related to cryptocurrencies in an effort to fight scams. Facebook, in its ad policy, said that it is barring ads for “financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, and cryptocurrency