bitcoin: Own Bitcoin? You may be required to disclose it in I-T returns
Crypto players have requested the government to make specific provisions in the Income Tax Act that would lead to individual crypto holders of more than Rs 50 lakh to declare their assets once a year.
“We have made proposal to the government to include cryptocurrency related disclosures in the IT returns that would lead to greater transparency in such holdings,” said Ramesh Kailasam, CEO of crypto industry association IndiaTech.org. “Disclosure of such investments by individuals could lead to transparent audit, because currently the onus is on crypto exchanges which do KYC (know your customer) checks on their own.”
The corporate affairs ministry had earlier made it mandatory for companies to disclose the profit or loss on transactions involving cryptocurrency.
IndiaTech.org has made a five-point policy recommendation for regulating cryptocurrencies, which includes introducing a system to register homegrown exchanges.
The recommendations were shared with the finance ministry, commerce and industry ministry, Reserve Bank of India, and official think tank Niti Aayog.
India should recognise crypto tokens as digital assets rather than currencies, and clarify policies on exchange ownership parameters, KYC, and accounting and reporting standards, among others, the industry body said.
Sumit Gupta, CEO of crypto exchange Coin DCX, said granting crypto currencies a digital asset status will allow people to “buy and trade in it”, avoiding “a permanent ban-like situation”.
“Also, using KYC at the entry and exit points where crypto is purchased from exchanges ensures that there is always traceability and accountability on the part of those who buy and sell crypto assets,” Gupta said.
The Indian crypto community consists of over 10 million holders with over $1 billion of assets, a daily trading volume of $350-500 million, more than 300 startups, tens of thousands of jobs, and hundreds of millions of dollars in revenue and taxes.
Recently, finance minister Nirmala Sitharaman had said the government would take a “calibrated” approach to crypto trading and that “negotiations and discussions” are going on with the RBI on how to regulate cryptocurrency.
Under the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India aims to launch its own digital currency that will be backed by the central bank.
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