India’s government has taken the first step in regulating Bitcoin and other cryptocurrencies, making it obligatory for all companies in the country to report virtual currency dealings in its balance sheets.
The guideline was adopted on Thursday by the Ministry of Corporate Affairs (MCA). It is likely that the step will shift cryptocurrency transactions in India and that greater transparency between investors and publicauthorities is expected.
Crypto Dealings Disclosure
It is estimated that more than 7 million investors have put cryptocurrencies worth more than $1 billion in India. It makes it very difficult for the government to enforce a comprehensive ban, but it expects further steps to improve RBI regulation.
Companies will have to report their transactions in cryptocurrencies, as the government is introducing tighter disclosure rules to increase transparency.
According to a senior official, complaints have come up in the past that investors promise high returns in cryptocurrencies, and even people are losing capital. The officer stated that the most recent amendments to the regulations are additional to the CARO (Companies Auditor’s Report Order).
From the next financial year, CARO is set to be applicable. He added that these also seek to increase transparency. Schedule III covers general guidelines for creating a company’s balance sheet and profit and loss statement.
The amendments to Schedule III will provide a greater understanding to different stakeholders/users of financial statements on particular products, Prateek Agarwal, partner of Nangia & Co LLP. They will also make financial information/standardization comparable between different firms.
An Eye on Accounting Softwares
Different rules under corporate legislation concerning the audit, auditors, and accounts have been amended by the Ministry for Corporate Affairs (MCA). Further, there are increased disclosure requirements, including details on their dealings on crypto-currencies, through the modifications to Schedule III of the Companies Act 2013. The Ministry, which implements company law on Wednesday, has informed us of these changes scheduled for April 1.
Agarwal said that they consider that accounting’s software requirement is a welcome move toward transparency, even if the current accounting software does not support the requirements, and may have a considerable effect on some small companies. The Department has also updated the guidelines for the auditing and auditors of businesses. These seek to extend the auditors’ reporting reach in their audit reports.
According to Agarwal, the auditors will be further liable for modifying the auditor’s report because there are major additional conditions to be informed and also for procedures to be implemented by the businesses over the whole year.
In light of recent rumors about prohibitions, the global cryptocurrency exchange Bitex founder and chief executive of Monark Modi said that enabling cryptocurrencies to be part of accounting practices certainly will make it possible for investors to become concerned about taxation. The best move forward would be to establish legislation that provides protection for investors and taxation factors and fosters cryptocurrency as an alternative investment class.