Crypto traders hit with hefty tax penalty as IT Dept cracks down on P2P transactions

Over the past few weeks, many crypto investors received income tax notices for non-payment of taxes on peer-to-peer (P2P) trades through foreign exchanges. A Binance spokesperson told Moneycontrol that the exchange has been closely monitoring and reporting suspicious trades to FIU-Ind. Rakesh (name changed) had sold crypto tokens worth Rs 98,500 through peer-to-peer (P2P) transactions for about Rs 100,000 back in 2022, making a meagre profit of Rs 1,500 on this sale. He received the entire amount in his bank account and the transaction happened through a centralised exchange. A few weeks ago, he received a notice from the income tax department flagging his Rs 100,000 deposit. On producing screen shots of the P2P trade and the statement generated by the exchange as a proof, the official asked him to pay 78% or Rs 78,000 in fine on a Rs 1,500 profit. He is one of the 50 plus customers of crypto tax platform Koinx who got such IT notices over the past few weeks. Koinx founder Punit Agarwa...