“Cryptocurrencies, digital tokens should be treated as ‘capital assets’ for income tax purposes”: CII Industry Authority

CII said

CII said in a statement that will be considered securities of a special class to which the provisions of existing securities regulations will not apply and that a new set of regulations appropriate to the context should be developed and applied. use.

This means that regulation is focused primarily on transactions and custody, rather than issuance (except where issuance requires an Initial Coin Offering (ICO) to the public by an issuer. was established in India), it said.

Centralized exchanges and custody providers that can be established in India are required to be registered with Sebi and comply with KYC and AML compliance requirements applicable to market intermediaries financial markets, adding that they are legally responsible and responsible for maintaining the safety of cryptocurrencies/digital tokens held by participants in digital wallets provided by them.

“To support this obligation, centralized exchanges may be required to maintain minimum capital and guarantee funds while complying with investor disclosure requirements set forth in from time to time, with respect to trading and investment risks,” it said.

It should be noted that Cryptocurrencies and Regulations of the Official Digital Currency Bill, 2021, have been included in the Lok Sabha Newsletter-Part II for introduction during the ongoing winter session. The bill proposes to create a favorable framework for the creation of an official digital currency issued by the Reserve Bank of India (RBI), the Bulletin said.

It also seeks to ban all private cryptocurrencies in India, however, it allows certain exceptions to promote the underlying technology of the cryptocurrency and its use. The Council also recommends expanding the treatment of cryptocurrencies/digital tokens as ‘security’ of a special category in relation to income tax and GST laws.

Crypto/digital currency tokens may be treated as ‘capital assets’ for income tax purposes unless deemed ‘stock in trading’ by participants/reviewers. Tax reporting requirements should also be imposed on participants who are investing in or trading crypto assets (whether through a centralized crypto exchange or otherwise) through specific disclosures. on the income tax return.

Regulators and tax authorities must start building capacity to harness the power of big data and analytics to monitor the digital trail embedded in the blockchain network that crypto/cryptocurrency/assets real run on it.

In order to protect the public interest, the legal authority to issue crypto/digital tokens of the Indian Rupee should be limited to the issuance of Central Bank Digital Currency (CBDC) ) by RBI. In addition, it said, if such a release by any entity other than the RBI is deemed acceptable, such release must be pre-approved by the RBI, subject to compliance with the RBI standards. Strict safety standards for holding assets that are primarily credit-free, short-term Treasury bills/sovereign securities.

(Except for the title, this story has not been edited by NDTV staff and is published from a press release)