Transaction in Bitcoin under IT scanner for tax evasion

Government to set up panel to decide on bitcoin policy: Report

Crackdown At Bitcoin Exchanges Start: Five Things To Know

Read what other central banks are saying about digital currencies hereThe federal government has set up a panel headed by Economic Affairs Secretary Subhash Chandra Garg to decide on India's stand on virtual currencies, people with knowledge of the matter said on December 12.

The operations were led across six major cities - Bengaluru, New Delhi, Hyderabad, Kochi, Kolkata, and Gurugram - by the Bengaluru wing, under the Karnataka and Goa directorate of the department.

Bitcoin has soared about 17-fold this year as people rushed to buy the digital currency in the hope it will become an alternative to gold or traditional money.

The widespread operation is being carried out over suspicions of tax evasion by exchange customers, the Press Trust of India states.

According to the survey teams, these officials are armed with financial data of these exchanges.

"We are looking at collecting information about modus-operandi of bitcoin exchanges, investors, their source of investment and possibility of collecting tax", Ahluwalia said.

Entries of HNIs suggest that they were trading on these exchanges.

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"Out of these, about 8-10 lakh [800,000-1,000,000] entities would be active for transactions". Through the investigation, officials of the Income Tax department are, therefore, trying to establish a link between the Panama and Paradise exposes.

Bitcoin, widely believed to have been invented by a person or a group named Satoshi Nakamoto, can be mined by anybody who has computing skills, though mining it is becoming hard by the day.

Bitcoins supply is limited to 21 million - a number that is expected to be reached around the year 2140.

Are you investing in Bitcoin?

Exchanges have tied up with companies to facilitate payments of phone bills, DTH bills or even transfer of funds from overseas using BTC.

The news comes after reports of the government having set up a cryptocurrency panel, which recommended shutting down dealers of these unregulated and decentralized currencies across the country. Investors are going by past returns, without realising the risks ahead.

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