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

business-standard.com:

New Delhi [India], February 3 (ANI): 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 lakh crore, 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 lakh crore.

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.

.ohapatra said that tracking and tracing these crypto investors is very difficult. The TDS