CBDT is investigating tax evasion and laundering of unaccounted income by high-risk persons through investment in crypto currency. Such entities and individuals which are engaged in Virtual Digital Asset (VDA) transactions and have failed to comply with the Income-tax Act, 1961 have been identified for verification. The investigations pertain to AY 2023-24 and AY 2024-25.
Section 115BBH of Income Tax Act, 1961 inserted by the Finance Act, 2022 prescribesflat tax rate of 30% (plus applicable surcharge and cess) on income from VDA transfer. The provision does notallowdeduction of any expenses except cost of acquisition.
Further, set-off of loss from VDA investment or trading is not allowed to be set off against any other income or for carry forward to subsequent years.
Data analytics has shown that significant number of personshave violated provisions of Income Tax Act by not filing Schedule VDA of ITR and offering tax on the income earned at lower rate or claiming cost indexation.
ITRs filed by taxpayers is being verified withTDS returns filed by the Virtual Asset Service Providers (VASPs) popularly known as crypto exchanges and defaulters may be selected for further verification/ scrutiny.
It is learnt from reliable sources that CBDT has recently sent e mails to thousands of defaulting persons to review their ITR and update if any income on account of VDA transactions have not been properly declared.
CBDT has recently embarked on a new approach termed as NUDGE (Non-intrusive Usage of Data to Guide and Enable) Taxpayers, as a part of TRUST Taxpayers FIRST philosophy. This campaign is seen as third NUDGE campaign launched by CBDT in last six months. Earlier NUDGE campaigns were on declaration of foreign assets/ income by taxpayers and withdrawal of bogus claims of deduction u/s 80GGC.