According to a recent report by The Economic Times, crypto exchanges, including Binance and WazirX, are among several industry firms accused of evading goods and services tax (GST) amounting to $97 million. The total tax liability is distributed across 17 cryptocurrency exchanges operating in India.
Crypto Businesses In India Accused Of GST Evasion
In a written response to the Lok Sabha – India’s lower house of parliament – Minister of State for Finance Pankaj Chaudhary disclosed that 17 cryptocurrency firms are implicated in the $97 million GST evasion case.
The Central GST authorities have already launched an investigation into the matter. Among the implicated firms, Binance Group-linked Nest Services Ltd. is the most significant offender, reportedly owing around $85 million in GST alone.
As part of the ongoing crackdown, the government has so far recovered approximately $14 million in taxes, penalties, and interest. Among the other exchanges accused of tax evasion, WazirX owes $4.7 million, CoinDCX $1.9 million, and CoinSwitch Kuber $1.7 million.
WazirX has already paid 20% more than it was accused of evading. The exchange has paid $5.8 million to the Indian government, including penalties and accrued interest. A representative from WazirX explained that the tax evasion occurred when India’s GST laws on digital assets were ambiguous.
2024 has not been particularly kind to WazirX, as the exchange fell victim to a massive hack earlier this year, resulting in the loss of funds worth more than $230 million. The North Korean hacking group Lazarus was identified as the most likely perpetrator of the hack.
In addition to the investigation into crypto firms, four individual investors involved in digital assets are also under scrutiny for allegedly evading GST worth $207,000. The government has recovered nearly $283,000 in taxes, penalties, and interest from these individuals.
In conclusion, Chaudhary highlighted that 47 virtual digital asset service providers have already registered as reporting entities with India’s Financial Intelligence Unit. This move aims to prevent illicit activities commonly associated with cryptocurrencies, such as money laundering.
Indian Digital Assets Ecosystem Struggling Amid Unclear Regulations
Despite being ranked as the global leader in cryptocurrency adoption for two consecutive years, India has yet to establish a favorable regulatory framework for its crypto industry. Instead, the country’s high tax rates on cryptocurrency profits – without provisions to offset losses – have drawn criticism from industry leaders.
Notably, crypto regulations were absent from India’s Union Budget for 2024-2025, suggesting that regulating virtual digital assets may not be a priority for the government now. At press time, Bitcoin (BTC) trades at $95,900, up 0.1% in the past 24 hours.
