Agarwal’s Advice: Ensuring Accurate Tax Filing to Prevent Penalties on High-Value Transactions
The Income Tax Department in India has raised concerns regarding significant crypto transactions, drawing attention to this issue in recent alerts. Punit Agarwal, the founder of KoinX, an organization specializing in crypto tax management solutions, noticed an upsurge in income tax-related inquiries regarding crypto transactions earlier this week. His observations indicate heightened scrutiny from the income tax department concerning crypto-related tax matters in India.
According to Agarwal, the Indian government is implementing automated mechanisms to validate and cross-verify returns concerning crypto incomes, aiming to eliminate potential calculation errors.
To circumvent penalties associated with substantial transactions, Agarwal strongly emphasizes the necessity for taxpayers to diligently file their taxes, meticulously cross-referencing their ITR filings against the Annual Information Statement (AIS) to detect and rectify any discrepancies.
“Income Tax portal matches the transactions appearing in AIS and the data filed by users. In-case the authorities find any discrepancies, then they issue a notification to the user to re-check if they have missed anything or if everything is in-line. For people, if they find any discrepancies in their income reported vs income generated, then they have to file a revised return. Also, they need to give an explanation to the notification. In case everything is in-line and as expected, people can just submit the feedback mentioning they confirm everything is fine,”.
In the absence of a set rulebook for crypto, India levied taxes on crypto profits last April hoping to be able to maintain some track record of crypto transactions, most of which are largely anonymous.
The country levies a 30 percent tax on crypto incomes and also cuts one percent TDS on each crypto transaction – aiming to identify potential defaulters and suspicious crypto holders, who could be engaging in unlawful activities like money laundering or terror financing.
From what Agarwal shared on X, however, does show the strict oversight that the Indian income tax department is indeed maintaining over the crypto sector.