CBDT chairman explains why huge collections are expected from ‘crypto tax’

CBDT chairman explains why huge collections are expected from 'crypto tax'

 1,301 total views

CBDT chairman explains why huge collections are expected from ‘crypto tax’

The imposition of 30 per cent tax on proceeds of digital assets, as announced in the Union Budget 2022-23, will lead to huge tax collections as the turnover of the top 10 crypto exchanges in the country is around Rs 1 trillion, said JB Mohapatra, Chairman, Central Board of Direct Taxes (CBDT).
Talking to ANI, the CBDT chairman said there are around 40 crypto exchanges functioning in India, out of these 10 are significant transactions. Their turnover is between Rs 34,000 crore to Rs 1 trillion.
Mohapatra said, “If we charge TDS at 1 per cent on these turnovers then you can estimate the collection through TDS income tax department will get. The proposal to tax 30 per cent on the individual transactions from April 1, 2022 government will generate huge tax collection, but it will be very difficult to say at the moment what will the exact tax collection by taxing the transfer of digital assets.”
Mohapatra said, “During our pilot project on crypto we found that they are operating on four models.”
“People are trading in crypto but they are not filing it in their income tax returns. Those crypto traders filing their income tax returns have no indication of crypto trading. The third model, we found that there are details of crypto trading but their estimates of stock sale and purchase or cryptos are wrong. The fourth model shows the details of crypto profits in their income tax return but they show it as income from other sources, income from capital gains, or income from the business. In suspicious cases, income tax returns were not filed. This is very problematic for us,” the CBDT chairman said.
JB Mohapatra said that tracking and tracing these crypto investors is very difficult. The TDS provision will now help in tracking and tracing the people who are in this business and making profits but are not filing it in their income tax returns. Other than tracing through TDS they can be tracked through reporting entities
He further added that the real identity of investors is problematic. “Those who don’t file their income tax return and are doing heavy transactions in their accounts are suspicious for us. Our target is to find out the truth behind it, whether he is trading for himself, is it proxy, or is it benami,” he said.
The new legislation will help the income tax department find out the real investors behind the trades which have been concluded.
Clarifying the definition of digital assets Mohapatra said that the definition of digital assets is given under section 247A. Any information or code or number or token generated through cryptographic means or otherwise, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value stored or traded electronically are digital assets. A non-fungible token (NFT) or any other token of similar nature is also a digital asset.
CBDT Chairman clarified that the taxability of the crypto-currency is certain for this financial year too. Crypto investors should know that transactions done before April 2022 will not be tax-free.
On the government allowing taxpayers to re-file ITR within two years to correct errors, CBDT Chairman said that this shows realization on the part of the Department that people can make mistakes in filing income tax returns. It reposes faith in the public to rectify the mistakes. The door which is closed on any particular year on December 31, is now open for the next 27 months.
Talking about the tax collection Mohapatra said, “We will exceed the direct tax collection target of Rs 11.08 trillion set for the financial year 2021-22. We had collected Rs 10.43 trillion so far. The budget estimate for 11.08 trillion not only will be achieved, but it will be exceeded.”
“Revised estimate numbers have also been given to us now of Rs 12.50 trillion. We are confident of reaching the target of Rs 12.50 trillion,” he added.
www.business-standard.com dt. 07.02.2022

Leave a Comment

Your email address will not be published.

the taxtalk

online portal for tax news, update, judgment, article, circular, income tax, gst, notification Simplifying the tax and tax laws is the main motto of the team tax talk, solving