Undisclosed crypto income: Respond to taxman's notice, file revised return

Underreporting or misreporting crypto income can lead to penalties ranging from 50 to 200%, even imprisonment of up to seven years
Himali Patel
Listen to This Article
The Income-Tax (I-T) Department has detected widespread tax evasion involving cryptocurrencies and, according to media reports, has issued emails to thousands of defaulting taxpayers seeking transaction details. Investors must understand the tax rules governing crypto assets and respond promptly to these emails.
How evasion is detected
The department gathers data on cryptocurrency activity from several sources. 'Reporting agencies such as cryptocurrency exch­anges and banks are obligated to report transactions through the Statement of Financial Transactions (SFT) to the tax department. Since July 1, 2022, TDS deduction is applicable on crypto tran­sfers, which serves as a direct repo­rting to the I-T

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Economic Times

5 hours ago

• Economic Times

UAE rule, wary I-T to deter dodgy crypto deals

Mumbai: In the lane to launder money, the skill to move cryptos to control companies and properties in Dubai has been honed over the past few years. But treading that alley would soon become tougher. Dual, albeit unrelated, developments in India and the UAE would force money movers to devise new tricks. First, Income tax (I-T) officials, hunting for illicit homes of Indians over the past six months, now strongly suspect that some property purchases were made with cryptocurrencies; second, a new regulatory regime in the Middle East country, would soon end payment in cryptos, other than stable coins, to freely buy goods and services. "When Indian residents use crypto to purchase real estate, they bypass Indian banking channels and FEMA scrutiny. But, under the new UAE regulations (expected from August), merchants would no longer accept crypto directly. Only entities licensed by the UAE Central Bank would be allowed to convert stablecoins to AED after collecting full KYC. While this framework ensures the buyer's identity is recorded, it remains unclear whether such data would be shared under the India-UAE tax treaty," said Purushottam Anand, founder of the law firm Crypto raiding a leading UAE developer having roots in Mumbai and clients across India, a northern office of the I-T department found that more than 460 buyers in the 650-odd property deals have no record of having remitted money through banks to acquire the properties. According to findings which were shared with other I-T centres two months ago, the arm of the UAE realtor which brokered the deals was aided by a network of 86 sub-brokers who later shared details with the tax office. According to tax circles, some of the clients had paid in cryptos, probably under the belief it would go untraced. Earlier this year, the department had found that hundreds of mule accounts were opened by a few persons in Kerala to deposit cash, use the money to buy cryptos -either on local platforms or through peer-to-peer transactions-and then move the coins to other wallets before encashing the them in UAE, or buying assets like properties, or transferring them to third parties. "When digital assets move from exchanges to P2P platforms or private wallets, monitoring becomes difficult, creating opportunities for illegal activities such as ransomware attacks, laundering, tax evasion, and potentially terrorist financing. Although the exchanges are required to report 'suspicious transactions', including withdrawals, with the Financial Intelligence Unit-India, such risks can be further addressed through stricter enforcement of TDS provisions, i.e. Sections 194S or 195, ensuring tax compliance for all crypto transactions, whether conducted on or off exchanges. Additionally, specifying the reporting entities and the format for disclosures under Section 285BAA will improve traceability," said Ashish Karundia, founder of the CA firm Ashish Karundia & Co. 'PAYMENT TOKEN REGULATIONS' The new 'Payment Token Services Regulation' lays down the rules and conditions established by the UAE Central Bank for granting a licence or registration for payment token services-which include payment token issuance, token conversion, and token custody and transfer. Under the rules no merchant or anyone in the UAE selling goods or services can accept a virtual asset unless it's a dirham payment token issued by a licensed issuer. Also, a bank cannot act as a payment token issuer. UAE is working on Dirham-linked stable coin (like USDT or Tether which is pegged to the dollar)."This would have implications for India which has close economic and financial ties with the UAE. By bringing digital assets such as payment tokens under a structured licensing and anti-money laundering framework, the regulation adds a layer of safety and transparency to cross-border digital financial flows. For Indian individuals and businesses engaging in the UAE's digital economy, on one hand this means greater clarity, reduced risk of fraud, and alignment with global best practices; on the other hand, the clear prohibition on anonymous crypto instruments like privacy tokens reinforces the global trend toward traceable and regulated digital transactions. This is something India is also actively pursuing through its own financial intelligence mechanisms. This would deter transactions in property, high value luxury products bought by Indians in UAE using crypto tokens," said Siddharth Banwat, partner at CA firm Banwat & Associates dealers said the UAE rules are not entirely fool-proof as coins can be routed through platforms in multiple jurisdictions whose cooperation would be vital to spot the trail. But the very presence of licensed intermediaries collecting and storing information would deter money movers.

Time of India

6 hours ago

• Time of India

UAE rule, wary I-T to deter dodgy crypto deals

Mumbai: In the lane to launder money, the skill to move cryptos to control companies and properties in Dubai has been honed over the past few years. But treading that alley would soon become tougher. Dual, albeit unrelated, developments in India and the UAE would force money movers to devise new tricks. First, Income tax (I-T) officials, hunting for illicit homes of Indians over the past six months, now strongly suspect that some property purchases were made with cryptocurrencies; second, a new regulatory regime in the Middle East country, would soon end payment in cryptos, other than stable coins, to freely buy goods and services. "When Indian residents use crypto to purchase real estate, they bypass Indian banking channels and FEMA scrutiny. But, under the new UAE regulations (expected from August), merchants would no longer accept crypto directly. Only entities licensed by the UAE Central Bank would be allowed to convert stablecoins to AED after collecting full KYC. While this framework ensures the buyer's identity is recorded, it remains unclear whether such data would be shared under the India-UAE tax treaty," said Purushottam Anand, founder of the law firm Crypto Legal. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Unlock full 2025 solar power in Bangladesh — install, maintain, upgrade Solar Panels | Search Ads Learn More Undo After raiding a leading UAE developer having roots in Mumbai and clients across India, a northern office of the I-T department found that more than 460 buyers in the 650-odd property deals have no record of having remitted money through banks to acquire the properties. According to findings which were shared with other I-T centres two months ago, the arm of the UAE realtor which brokered the deals was aided by a network of 86 sub-brokers who later shared details with the tax office. Live Events According to tax circles, some of the clients had paid in cryptos, probably under the belief it would go untraced. Earlier this year, the department had found that hundreds of mule accounts were opened by a few persons in Kerala to deposit cash, use the money to buy cryptos -either on local platforms or through peer-to-peer transactions-and then move the coins to other wallets before encashing the them in UAE, or buying assets like properties, or transferring them to third parties. "When digital assets move from exchanges to P2P platforms or private wallets, monitoring becomes difficult, creating opportunities for illegal activities such as ransomware attacks, laundering, tax evasion, and potentially terrorist financing. Although the exchanges are required to report 'suspicious transactions', including withdrawals, with the Financial Intelligence Unit-India, such risks can be further addressed through stricter enforcement of TDS provisions, i.e. Sections 194S or 195, ensuring tax compliance for all crypto transactions, whether conducted on or off exchanges. Additionally, specifying the reporting entities and the format for disclosures under Section 285BAA will improve traceability," said Ashish Karundia, founder of the CA firm Ashish Karundia & Co. 'PAYMENT TOKEN REGULATIONS' The new ' Payment Token Services Regulation ' lays down the rules and conditions established by the UAE Central Bank for granting a licence or registration for payment token services-which include payment token issuance, token conversion, and token custody and transfer. Under the rules no merchant or anyone in the UAE selling goods or services can accept a virtual asset unless it's a dirham payment token issued by a licensed issuer. Also, a bank cannot act as a payment token issuer. UAE is working on Dirham-linked stable coin (like USDT or Tether which is pegged to the dollar). "This would have implications for India which has close economic and financial ties with the UAE. By bringing digital assets such as payment tokens under a structured licensing and anti-money laundering framework, the regulation adds a layer of safety and transparency to cross-border digital financial flows. For Indian individuals and businesses engaging in the UAE's digital economy, on one hand this means greater clarity, reduced risk of fraud, and alignment with global best practices; on the other hand, the clear prohibition on anonymous crypto instruments like privacy tokens reinforces the global trend toward traceable and regulated digital transactions. This is something India is also actively pursuing through its own financial intelligence mechanisms. This would deter transactions in property, high value luxury products bought by Indians in UAE using crypto tokens," said Siddharth Banwat, partner at CA firm Banwat & Associates LLP. Crypto dealers said the UAE rules are not entirely fool-proof as coins can be routed through platforms in multiple jurisdictions whose cooperation would be vital to spot the trail. But the very presence of licensed intermediaries collecting and storing information would deter money movers.

Time of India

6 hours ago

• Time of India

Tigress Found Dead In Tadoba Buffer

Chandrapur: A six-year-old tigress was found dead under suspicious circumstances in Keslaghat forest of Mul buffer range, falling under Tadoba-Andhari Tiger Reserve (TATR), early on Friday. The lifeless body of the big cat was first spotted by tourists inside compartment number 360 of the forest during morning safari. On their way back, the tourists informed forest officials at Keslaghat gate about the tigress, following which a team led by acting range forest officer (RFO) Pendor reached the spot. After completing necessary inquest procedures, the carcass was shifted to Transit Treatment Center (TTC) in Chandrapur for post-mortem. Officials claimed that the feline, identified as T-177, died within the last 24 hours. The postmortem was conducted by a team of three veterinary experts — Dr PD Kadukar, Dr Ravikant Khobragade, and Dr Kundan Podchalwar. Officials including ACF (TATR Buffer) Saitanmay Dube, RFO Pendor, PCCF representative Mukesh Bhandakkar, and National Tiger Conservation Authority (NTCA) representative Bandu Dhotre were present during the examination. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Καταπληκτικό! Αυτός ο υπολογιστής σας δείχνει άμεσα την αξία του σπιτιού σας (δείτε τώρα)​ Αξία σπιτιού | Διαφημίσεις αναζήτησης Κάντε κλικ εδώ Undo According to the veterinarians, all body parts of the tigress were intact and showed no signs of poaching, effectively ruling out any foul play in the death of the feline. However, the exact cause of death could not be determined immediately. Preliminary findings suggest that the tigress may have died due to cardiorespiratory failure. Viscera samples have been collected and will be sent to a forensic laboratory to ascertain the precise cause of death. The carcass was later incinerated in the presence of forest officials and other witnesses on the TTC premises. India lost 95 tigers this year, Maha 26 In the last five-and-a-half months, 95 tigers have died in the country due to various reasons, and Maharashtra leads the tally. Total 26 tigers have died in Maharashtra this year, followed by 25 in Madhya Pradesh.