CBDT Issues Notices Over Crypto Tax Evasion: Section 115BBH Violations Under Scanner

The Central Board of Direct Taxes (CBDT) has intensified its efforts to curb tax evasion in the cryptocurrency space by issuing a wave of notices to investors. The department is scrutinizing transactions for non-compliance with Section 194S, which mandates a 1% Tax Deducted at Source (TDS) on all crypto transactions. Furthermore, violations of Section 115BBH, which imposes a flat 30% tax on income from Virtual Digital Assets (VDAs) without allowing for any deductions or set-offs, are also under the scanner. The tax authorities are using data from various sources, including crypto exchanges and financial institutions, to identify individuals who have not reported their crypto gains or have not paid the applicable taxes. This crackdown signals the government's intent to strictly enforce the tax regulations for VDAs and ensure that all participants in the crypto market comply with their tax obligations.