Bitex becomes first crypto exchange to provide investment disclosures
Premium- The government in March had made it mandatory for Indian companies, unlisted and private, to disclose their dealings in cryptocurrency or virtual currency
Cryptocurrency exchange Bitex has announced that it has started providing investment declaration reports for all its retail and institutional investors, becoming the first exchange in India to comply with the recent amendments made to the Companies Act 2013 by the Ministry of Corporate Affairs.
The government in March had made it mandatory for Indian companies, unlisted and private, to disclose their dealings in cryptocurrency or virtual currency.
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2 min read . 04:56 PM ISTFounded in 2018, Bitex started its operations in the United Arab Emirates and is now expanding its operations in India. The exchange’s current daily volume is about $2.5 million with 35,000 users.
The report can be submitted for tax purposes by individual investors as well as by companies and can be used to prepare financial statements as stipulated by the government.
“The recent directions by the government clearly pave the way for a transparent functioning of cryptocurrencies in India and also help retail and institutional investors to confidently go ahead to trade or hold cryptocurrencies. Similar practices are now commonplace in other major crypto markets in the world," said Bitex, founder and CEO, Monark Modi.
As of now, the Income-tax Act doesn’t define how cryptocurrencies are taxed. However, there are three ways one can look at it. First is if someone is in the business of trading crypto currencies, then the gains arising can be taxed as business income. Second is speculative transaction, there the gains are taxed as per an individual’s income tax slab.
The third approach is capital gains. If investors hold cryptocurrencies for 36 months or more, the gains would be taxable as long-term capital gains (LTCG), and less than 36 months, it would be short-term capital gains (STCG). Short-term capital gains are taxable as per the slab rates applicable to a taxpayer. And long-term capital gains are taxed at the flat rate of 20% with the benefit of indexation.
“If exchanges simply provide trading summary, containing what investors have sold or bought, then that will help them provide proof of exact money they made or lost to tax authorities while trading in cryptocurrencies. Earlier, exchanges were not providing these details to the investors," said Pallav Narang, partner at CNK RK & Co Chartered Accountants.
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