‘Crypto tax’ to lift collections by Rs 1 lakh crore: CBDT Chairman

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 trillion, said JB Mohapatra, Chairman, Central Board of Direct Taxes (CBDT).

The CBDT Chairman said there are around 40 crypto exchanges functioning in India, of which 10 are significant transactions. Their turnover is between Rs 34,000 crore to Rs 1 trillion.

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.

Mohapatra said tracking and tracing these crypto investors is difficult. The TDS provision will now help in tracking and tracing the people who are in this business and making profits but are not filing it in their I-T returns. They can also be tracked through reporting entities. 

On tax collection, he said, “We will exceed the direct tax collection target of Rs 11.08 trillion set for the FY 2021-22. We had collected Rs 10.43 trillion so far. We are confident of reaching the target of Rs 12.50 trillion as per revised estimate.”