KoinX helps retail crypto investors automate their taxes by integrating their portfolios and transactions with a single platform and providing a consolidated dashboard, In an exclusive interview with BitcoinWorld, KoinX would shed the light on how they help Crypto Traders in their Taxes,
1.The idea behind coming forward with the startup KoinX. Highlight some of the challenges KoinX as a brand is here to solve in the coming years
Built by Punit Agarwal, KoinX allows users to calculate taxes on crypto transactions made across various Web3 platforms. KoinX has already integrated with popular exchanges to automate the calculation of tax. With KoinX, the vision is to enable investors to automate crypto taxations by combining investor portfolios and transactions on a single, unified platform with centralized dashboards.
Taxations for Virtual Digital Assets (VDA) are Complex, Confusing and Time Consuming. There are many instruments across the Virtual Digital Assets like Decentralised Finance, Mining, Staking, Non-Fungible Tokens, and cryptocurrencies, which make it difficult for an individual to track net gains from each of these assets. The complexity further amplifies when one Virtual Digital Asset gets exchanged with another Virtual Digital Asset, thereby making it very difficult to comprehend their capital gains. Also, need for awareness around crypto taxation. This might lead to non-compliance.
KoinX has built a unified platform that allows an individual to automatically track the net capital gains across all the Virtual Digital Asset instruments. This process includes integration with Virtual Digital Asset providers, exchanges, and blockchain networks, thereby allowing to fetch of all the transactions made by an individual across all instruments on a single platform, providing a 360* view. Thus, the platform allows users to comprehend their net tax liabilities according to the laws of their land.
2.How does the platform work? How is crypto taxed in India & how can KoinX help simplify it?
KoinX is currently integrated with major crypto exchanges which enables crypto investors to integrate them and calculate the tax in one go.
We facilitate importing data via CSV uploads, API integrations, and something as simple as a one-click integration.
KoinX calculates the user’s capital gains and generates a ready-to-download tax report categorizing as per the applicable tax laws. The report can be used by the user to declare their crypto income. KoinX also provides TDS reports for the Financial year 22-23. The current version caters to only crypto exchanges and the new version, with a full wallet and exchange integration, will be a SaaS product that users can subscribe to.
3.Why is it important for chartered accountants to know about crypto, and how can that help them expand their business?
The second decade of the 21st century has witnessed a significant rise in another investment asset – cryptocurrency. India is fueling as one of the world’s most rapidly growing crypto countries. Coping with the high speed of technological & digital advancements and increasing international demand, the Indian government finally proposed an administration and tax regime on cryptocurrencies in its annual Budget for 2022. This provision has added responsibility on Chartered Accountants (CAs), auditors, and investment accountants offering crypto tax services. Understanding and calculating crypto taxes for income tax returns (ITR) are one of the biggest challenges for accounting personnel, as some crypto gains and losses are considered capital gains and losses. Policymaking and provisioning around digital finance and cryptocurrencies look tough and require CAs to press for further detailed narratives.
4.Understanding how crypto taxation works and the various factors that revolve around it.
Across the Virtual Digital Assets, there are many instruments like Decentralised Finance, Mining, Staking, Non-Fungible Tokens, and cryptocurrencies, that may determine the amount of tax levied.
The categorization of VDAs into capital assets or other category alter the tax dramatically.
Apart from this, the landscape, currency against which the crypto currency is bought, the platform from which it is bought and the time at which the cryptocurrency is bought, all of these are factors that affect the cryptocurrency tax.
5.Do you think that the taxation structure in India will have a considerable impact on crypto adoption?
Between June 2021 and June 2022, the crypto market in India grew by 600 percent (as per Chainalysis). But income tax and TDS implementation, combined with the downfalls of Vauld, Celsius, 3AC, etc, and global bearish sentiment around crypto resulted in over 70 percent trading decline in top Indian exchanges.
The crypto taxation structure in India is in its nascent stage and is still developing. Many more changes are expected to come and hence help better regulation of the crypto industry and might also affect crypto adoption to some extent. Apart from the regulatory framework, many national and international factors affect the rate of crypto adoption, with the taxation structure being one of them.
6.How does India’s crypto tax work, and how does the Income Tax Department (ITD) view Bitcoin and other cryptocurrencies
The Government of India introduced Section 2(47A) in the IT Act to define the term Virtual Digital Assets (VDAs). The definition essentially covers all kinds of crypto assets including cryptocurrencies, NFTs, tokens, and more.
From April 01, 2022, as per Section 115BBH of the IT Act, gains/profits made by the transfer of Crypto assets (both in INR and Crypto pairs) will be taxed at a rate of 30% (plus surcharge and 4% cess). The 30% tax rate will be applicable irrespective of the nature of income, i.e. it doesn’t matter if it is investment income or business income. Also, as per the latest notification, no deduction or set-off losses will be allowed.
This implies that while computing the gains, no exemptions or deductions except the cost of acquisition of the new VDA shall be allowed. The 30% tax isn’t the only amendment crypto is subjected to: Another section,194S, levies a 1% Tax Deduction at Source (TDS) on any consideration paid for the transfer of crypto assets on or after July 1, 2022. As per the guidelines of the Income Tax Department, the buyer (‘the deductor’) would be liable to deduct the 1% TDS on the consideration to the seller (‘the deductee’) if the aggregate transaction value exceeds Rs. 10,000 (Rs. 50,000 in-case of specified person) in the entire F.Y. The tax deducted is required to be reported to the government in Form 26Q.
For this purpose, KoinX has introduced a comprehensive tax guide that can be downloaded here:
7.How the acquisition of CryptoKanoon Will Help You?
Crypto Kanoon is India’s largest crypto community of intellectual investors. They were among the first few communities that talked about Crypto Taxes back in 2019. Through this acquisition, KoinX aims to grow awareness about cryptocurrency taxation and bring insights to Indian investors and potential customers to Crypto Kanoon’s social media audience which is claimed to be more than 120,000. The acquisition also aims to help the platform get access to their community participants who are also their potential customers and are looking for legal and cryptocurrency tax queries to be solved, as India is expected to move towards a regulated environment for digital assets.