jewellers were among those who have invested in bitcoin and other virtual currencies. Tax officials told that they are gathering data from nine cryptocurrency exchanges in Mumbai, Delhi, Bengaluru and Pune.

​The Indian government has earlier issued repeated notifications and warnings against such virtual currency investments, saying these were like “Ponzi Scheme” that offers unusually high returns to early investors, 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.

Aman Kalra, marketing head of Coinsecure, a bitcoin exchange in New Delhi, said more than 150 bitcoins were changing hands every week through its platform. The company has 100,000 registered users and is now launching a platform to sell ethereum and other digital currencies. “I don’t think anyone in the government should label our business as a ‘Ponzi scheme’, we are not doing anything illegal,” said Kalra.

Bitcoin, the world’s biggest cryptocurrency, soared more than 1,700 percent last year, hitting a record high just shy of $20,000 as institutional and retail investors around the world snapped up the virtual currency.

Recently, Japan and China have made noises about a regulatory crackdown, while South Korean policymakers said they were considering shutting down domestic virtual currency exchanges.

Thousands of Indians dealing in cryptocurrency got tax notices, after a nationwide survey by the Income Tax Department showed that more than $3.5 billion (Rs 2,235 crore) worth of transactions was conducted over a 17-month period, Reuters reported.

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 I-T Department’s data showed that young investors, real estate players and 

IT Department sends notice to thousands of Indians trading cryptocurrency.