Quote from: KryptoKings on May 14, 2021, 09:17:56 AM

Thank you for this detailed explanation. I would like to know what amount would be consider huge to attract tax men attention?
No I haven't done anything illegal and I always file my ITR on time.
Though I never mentioned crypto in my returns I show all income earned as freelancer.

I'm glad that you found it useful. In relation to your query, I have practically seen tax officers chase for suspicious credits of INR 1 lakh or more in a single transaction. If it is split up in various months, the risk reduces substantially. However, do note that tax officers also collect the information from Bankers on what is the aggregate amount of credits in your bank account. For eg. if you get INR 50,000 every month, you'll have a cumulative credits of INR 6 lakhs in a year. This would then be compared against the total receipts (i.e. income before deducting expenses, in case of businesses such as freelancing). If your receipts declared in ITR is greater than the credits in bank account, the chance of getting picked for assessment reduces substantially.

Further, regarding your last line, do you mean to say that your crypto income was not disclosed in the return of income? If that is the case, only if the tax officers pick your case for assessment and are able to get that information, they might ask you to pay taxes on it with interest and penalties. However, if the taxes that you have already paid is more than 90% of the taxes that you would have to pay on full income, then it is very less likely to attract any interest or penalty.

Needless to say, if you have already disclosed a large amount of income as taxable when compared to your bank credits, then you may not even have to worry about being picked for assessment.

In relation to the topic of exit window to investors (if a ban is proposed), if the amount of gain you have at the time of disposing your crypto holdings is fully offered to income tax, there should not be any worry. However, if there is a substantial dip (around 20%) in the income offered in the very next year, you maybe questioned/picked for assessment for the income of the next year. The tax offices are using data analytics techniques to identify variations in the income offered versus various data gathered through GST filings, Bank statements, TDS deductions etc. and if the variation is very less (less than 20%), it is likely to get ignored.

Lastly, in recent years I have seen a trend of individuals not being picked for assessment and your case shouldn't be picked as well in the normal circumstances. Also, in my personal view, Indian government may not impose a ban on cryptocurrencies and have written down various grounds to challenge such a ban, if imposed, in this article: https://bitcointalk.org/index.php?topic=5334398

Hope this helps. Thank you.