Our Government here will always question people who become rich instantly, sometimes they will relate all the wealth to drugs and smuggling so they can send us to jail for a questionable wealth and not paying taxes. they will do background checking, even if they don't find any illegal activities we did they still think that we do illegal. What if I become rich because of BTC do you think they will believe if I say that its bitcoin that making me rich? How will I explained to them?
I am not sure if you are from India? But we do have the same scenario as what you have stated. The best way around is to talk to tax consultant and mention how are you making extra $ from bitcoins, and whether your income source will fall under tax scheme. Sometimes we feel that by not disclosing our earnings we can save amounts, but that all are in vain, Banks and Govt are having records. It's better to disclose now and be safe, rather than be penalized later.
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