India’s Income Tax Alerts Point at Rising Crypto Scrutiny; Here’s What To Do

India’s income tax authorities are reportedly increasing their compliance focus on digital assets. Punit Agarwal, founder of KoinX, addressed the rise in income tax queries related to cryptocurrency transactions in a post on X.

Also Read: India Crypto Landscape Under Pressure As Officials Weigh Economic Stability Risks

Surge in Income Tax Alerts

KoinX, a firm specializing in cryptocurrency tax management and accounting, has observed a marked rise in alerts from the Indian Income Tax Department concerning ‘high-value transactions’ for the assessment year 2023–24. Agarwal advises that there is no need for panic.

Based on the thread shared by the firm, this rise in alerts is an indication of the government’s surveillance of crypto compliance. The company pointed out that the Annual Information Statement (AIS) might not accurately reflect an individual’s crypto transaction calculations, posing challenges for taxpayers and authorities.

KoinX emphasizes the need to verify the data in the ITR filed against the AIS to identify any discrepancies. The company also advises taxpayers to file revised returns for crypto income if they were not accurately filed initially, warning that high-value crypto transactions could attract penalties.

Meanwhile, regular monitoring of transactions, maintaining detailed records for accurate tax reporting, and staying informed about the latest developments in cryptocurrency tax regulations are among the key recommendations from the crypto firm.

What is India’s crypto stance?

The news of increased crypto scrutiny comes at a time when the Reserve Bank of India (RBI) has reiterated its opposition to the sector. Concurrently, reports also confirm that India’s apex bank continues to consider a complete ban on cryptocurrencies as a viable option.

At the same time, a new report notes concerns by Indian authorities about the nation’s macroeconomic stability because of the emerging asset class.

However, despite the risks, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), recently highlighted the widespread adoption of cryptocurrency assets in India. This indicates that regulatory hurdles are not deterring the use of the asset class in the region. And a working framework that could mitigate investment risks for retail investors is the need of the hour.

Also Read: India Crypto Bill: India May Have Its Crypto Or Web3 Bill By 2025: MP Jayant Sinha