The income tax department has sent tax notices to over thousands of people for dealing in cryptocurrency after nationwide survey revealed that more than $3.5 billion worth transactions were made in just 17-months time, according to a Reuters report.

The IT department has sent notices to people dealing in Bitcoin and other virtual currencies, including Ethereum and Ripple, to pay tax on capital gains. The tax department has also asked for further details about the investor's total holdings and the source of funds in the tax notice, the report further added.

The income tax official gathered data from nine exchanges in Delhi, Mumbai, Pune and Bengaluru and found the real estate players, tech-savvy young investors are among the ones mainly involved in investing bitcoins and other virtual currencies.

Governments all around the world are struggling to regulate the cryptocurrency trade and the policy makers are likely to discuss about the matter in the upcoming G20 summit in Argentina in March.

The Indian government has earlier issued repeated notifications and warnings against such virtual currency investments, but, is yet to impose any restrictions on the cryptocurrency industry that has around 200,000 users in the country every month. Earlier, Finance Minister Arun Jaitley said: “The government’s position is clear; we don’t recognise this (Cryptocurrency) as legal currency as of now.” The Income Tax department has sent notices to the offices of top nine Bitcoin exchanges.

On November 13, a Supreme Court bench of Chief Justice Dipak Misra and justices AM Khanwilkar and DY Chandrachud said: “The emerging trend of crypto money, if unchecked and unregulated, is a threat to exchequer’s money and financial sovereignty of the country.”

After the apex court observation, all regulatory agencies became active. The Income Tax department sent notices to the offices of top nine Bitcoin exchanges.

Indian cryptocurrency geeks have been offered to set up mining centres after the Chinese government ordered closing down of Bitcoin mining in the country. Indian crypto players are accepting such offers albeit on a rider: there won’t be any deviation from the government of India’s guidelines on cryptocurrency.

With agency inputs