Jan 05, 2022
Tax cloud over cryptocurrency exchanges as income tax department eyes probe
Fresh trouble could be brewing for the cryptocurrency exchanges as the income tax department is now contemplating investigating them over the tax applicable to their total income. This comes after the Goods and Services Tax (GST) department conducted searches in the past week on the crypto exchanges. The direct tax department could look into the quantum of corporate tax payable for the cryptocurrency exchanges, said people aware of the development.
In the last week, the Directorate General of GST Intelligence (DGGI), an investigation arm of the indirect tax department, conducted searches on several crypto exchanges and asked them to pay GST on their transaction fees or margins. The fear is that the tax department will question the way exchanges record their revenues.
"There is no clarity in the way the exchanges recognise revenues. Each firm does it as per their understanding of accounting and the income tax officials have concerns over the ambiguity," a person aware of the development said.