Crypto investments underneath scanner: CBDT launches probe into unaccounted revenue; high-risk buyers in VDA could face scrutiny

The Central Board of Direct Taxes (CBDT) has launched a probe into doable tax evasion and laundering of unaccounted revenue by way of investments in digital digital property (VDAs), together with high-risk VDA transactions and cryptocurrencies, sources within the authorities mentioned on Thursday.The tax authority is presently verifying people and entities engaged in high-risk VDA transactions who seem to have did not adjust to key provisions of the Revenue Tax Act, 1961, PTI reported. These embrace non-disclosure of digital asset revenue and incorrect tax filings, in response to officers conversant in the matter.Below Part 115BBH of the Revenue Tax Act, launched within the Finance Act, 2022, revenue from the switch of VDAs is taxed at a flat price of 30%, plus relevant surcharge and cess. The regulation prohibits deduction of any bills apart from the price of acquisition and likewise disallows the set-off or carry-forward of losses from VDA transactions.Authorities knowledge analytics has revealed widespread non-compliance, with a big variety of taxpayers both failing to report digital asset beneficial properties within the designated Schedule VDA of their revenue tax returns (ITR), or paying tax at decrease charges whereas incorrectly claiming advantages comparable to value indexation.CBDT has matched ITR filings with TDS knowledge submitted by Digital Asset Service Suppliers (VASPs), generally generally known as crypto exchanges, and discrepancies have triggered a wider scrutiny, officers mentioned. Taxpayers discovered defaulting may very well be topic to additional verification or scrutiny underneath the regulation.In current weeks, the board has despatched emails to 1000’s of people recognized as high-risk defaulters, urging them to assessment and, if crucial, replace their ITRs to precisely replicate revenue from VDA transactions.The event comes underneath the CBDT’s ongoing push to advertise voluntary compliance by way of its “NUDGE” framework — quick for Non-intrusive Utilization of Information to Information and Allow taxpayers — underneath its “Belief Taxpayers First” philosophy.That is the third NUDGE marketing campaign initiated by the division previously six months, following earlier efforts targeted on overseas asset disclosures and withdrawal of ineligible deductions claimed underneath part 80GGC.