New tax bill to put crypto under scanner: Banks, entities must flag transactions to I-T dept

Banks and other reporting entities specified by the government will have to furnish information pertaining to the transaction of cryptocurrency assets, according to the provisions contained in the new Income Tax Bill, said a source.

The due diligence process to identify a crypto asset user or owner will be notified by the government in the rules after the passage of the Bill.

“A reporting entity will have to furnish information pertaining to the transaction of crypto assets in a statement for the period, time, and manner prescribed by the income tax authority,” said the source on the likely provisions contained in the Bill. It may be noted that banks, financial institutions, intermediaries, and other entities generally act as reporting entities for the income tax department. The new Income Tax Bill will be tabled in the Lok Sabha tomorrow.

As per the likely provisions, in the case of a defective statement, the income tax department may grant a thirty-day period for rectification. If the defect is not rectified, the provisions pertaining to inaccurate information in the statement will be applied.

In the case of non-submission, the tax authority may serve a notice requiring the individual to furnish details of crypto deals within a period not exceeding thirty days from the date of the notice. In the event of any inaccuracy in the information provided in the statement, the individual must intimate the authority in the prescribed format within ten days.

Going forward, the Central Government will notify the authorities to be registered as reporting entities, along with the nature of the information and the manner in which such information must be maintained by the reporting entities.