Crypto investments under scanner: CBDT launches a probe in non -accepted income; Investors with a high risk in VDA can be confronted with control – Times of India

The Central Board of Direct Taxes (CBDT) has launched a probe to possible tax evasion and the money laundering of non-accepted income through investments in virtual digital assets (VDAs), including risky VDA transactions and cryptocurrencies, sources in the government said on Thursday.The Tax and Customs Administration currently verifies individuals and entities involved in risky VDA transactions that seem to have failed to comply with the most important provisions of the Income Tax Act, 1961, PTI reported. These include non-repetition of digital asset income and incorrect tax applications, according to officials who are familiar with the case.According to section 115BBH of the Income Tax Act, introduced in the Finance ACT, 2022, income from the transfer of VDAs are charged with a fixed rate of 30%, plus applicable allowance and CESS. The law prohibits the deduction of any costs, apart from the costs of acquisitions and also does not allow the contrast or transport of losses by VDA transactions.Government Data Analytics has demonstrated widespread non-compliance, with a considerable number of taxpayers who do not report digital assets winnings in the designated schedule of their income tax returns (ITR), or paying taxes at lower rates at lower rates, while incorrect claims such as cost indexation.CBDT has matched ITR files with TDS data submitted by Virtual Asset Service Providers (VASPs), better known as crypto exchanges, and discrepancies have caused a broader control, said officials. Taxpayers who are in default can be subject to further verification or control under the law.In recent weeks, the board has sent e-mails to thousands of people who have been identified as defaulters with a high risk, and urge them to assess and, if necessary, to update their ITRs to accurately display the income from VDA transactions.The development falls under the continuous urge of the CBDT to promote voluntary compliance by its “push” framework-short for non-reducing data to guide taxpayers and to switch on the philosophy of the “Trust TaxPayers First” philosophy.This is the third push campaign that the Department has initiated in the past six months, after earlier efforts aimed at disclosure of foreign assets and the inclusion of non -intelligent deductions that are claimed on the basis of Article 80GC.