India to require companies to disclose digital currency holdings

Companies in India will now be required to give full disclosure of their digital currency holdings, following measures set to come into force from April 1.

Officials at the Ministry of Corporate Affairs processed an amendment to Schedule III of the Companies Act, 2013, requiring companies both public and private to disclose information about their digital currency holdings and dealings in other digital assets.

According to press reports, companies will be expected to disclose any “profit or loss on transactions involving Cryptocurrency or Virtual Currency,” “deposits or advances from any person for the purpose of trading or investing in cryptocurrency/ virtual currency,” and “amount of currency held as at the reporting date.”

Details of digital currency dealings will be expected to be disclosed on profit and loss statements and balance sheets, submitted as part of their existing annual compliance obligations.

The move is said to have been prompted by signs from the U.S. and Europe that companies are heavily investing in digital currencies and other digital assets, which the Indian ministry expects could also apply to local companies.

The disclosures will allow government agencies to establish whether tax on any gains is being appropriately reported and paid, as well as allowing them to better regulate digital asset activities across the Indian corporate sector.

Just last month, Indian regulators told companies engaging in IPOs to liquidate any digital currency positions they were holding, as the country moves towards what many see as an eventual ban on all digital currencies.

Similarly, digital currency companies in India have faced prolonged pressure from regulators and the country’s reserve bank, which had made it almost impossible for companies in the digital currency sector to do business in India.

The new disclosures mandate will come into force from the upcoming tax year, and is expected to have a further bearing on the policy direction for regulating digital currencies in India in the near future.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers

YouTube video

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.