Young investors, those in their early 20s, some of who have dropped out of school or college, have become millionaires with the interest in cryptocurrencies (especially bitcoins) in India increasing, a recent survey of bitcoin traders by the Income Tax Department across the country has revealed.
The rise in wealth of these investors coincides with a steep rise in the price of bitcoins. While a bitcoin was trading at less than $1,000 at the same time last year, it breached $19,000 mark briefly and is currently trading at around $17,000. On Monday, one of the leading trading platforms in India was helping investors buy bitcoin at ₹11.3 lakh, which included their charges, while the sell price was around ₹9.3 lakh.
Sources said some investors had become millionaires in the last one year as the price of bitcoins soared. “These investors may be glued to the system 24/7 to monitor the price movement. Some are not even aware that the profits in bitcoins attract taxes,” sources said.
The very first survey on agencies dealing with bitcoins in the country has revealed interesting details of investors and the pattern of investments in cryptocurrencies in India. The nationwide survey was recently conducted on nine agencies in Bengaluru, Delhi, Mumbai, Pune, Gurugram, Hyderabad, and Gaziabad where bitcoins were being traded. India is yet to take a decision on whether to ban or allow trade in bitcoins.
Payments in bitcoins
Another trend that the survey has found is some companies based in India and offering services to clients abroad have started receiving payments through bitcoins. Though payments were found in the books of the bitcoin receiving companies which could declare them as income later, sources said these kind of payments were not by the rulebook. “Any export-related proceed has to be routed through the Reserve Bank of India-mandated channels and by the nature of transaction, bitcoin payments defy these channels,” sources said, and added that many of the trends found in bitcoin were not covered under regulations of several regulating bodies. Tax sleuths have also found investors trading in nearly 500 to 600 cryptocurrencies using bitcoin. Once the investor buys bitcoins using Indian rupee, a trend has been seen of also using bitcoins to buy other cryptocurrencies. “However, if there is a sales proceed, the investor is getting money back in India rupee only,” sources said.
Meanwhile, the survey is set to unfold a huge database before the government, which is in the process of deciding how to regulate trading in bitcoin. The Central Board of Direct Taxes is expected to give a comprehensive report on bitcoins and their impact on various current legislation and regulating bodies, all of which is expected to help in formulating a broader policy.
“The data collected in the survey will give ground realities to policymakers,” sources said.
Total worth of trades
Over the last two years when the price of bitcoins has risen, the nine trading companies that were surveyed by the I-T Department, have reported trades — both sell and buy — worth about ₹17,800 crore. While there are about 21 lakh registered investors, about 6.7 lakh investors were found to be actively involved in bitcoin trading.
Sources said the respective Income Tax directorates have issued summons to the investors to collect information whether taxed money was invested in bitcoins and whether tax is being paid on the profit. “The department has started gathering information from the investors, many of whom have already appeared before tax investigators,” sources said.