Outside Source
Binance has received a show-cause letter from the Directorate General of GST Intelligence of Ahmedabad to pay inr 722 crores, approximately $86 million USD, as goods and services tax.
According to a Times of India report, the DGGI, an agency operating under India’s Ministry of Finance to combat tax evasion, alleges that Binance is liable to pay GST as it had collected fees from Indian nationals using its platform.
Binance also reportedly failed to register under the GST framework, resulting in the recent scrutiny.
The GST is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services at the national level. Foreign entities operating in India are required to pay this tax if they offer their services to Indians and register under the GST framework.
Binance allegedly earned at least 4,000 crores, approximately $476 million, from transaction fees, a source told Times of India.
Investigations conducted by the DGGI revealed that the fees were deposited in an account controlled by Nest Services Limited, a Seychelles-based Binance subsidiary.
On top of this, the DGGI has also reached out to other companies in the Binance group, including those operating in the Cayman Islands and Switzerland.
In response, Binance has reportedly appointed a representative to engage with the agency to resolve the issue.
For the DGGI, this was the first instance where it issued a show cause of this nature to a cryptocurrency firm. However, the agency has previously cracked down on domestic cryptocurrency exchanges to thwart tax evasion.
During the 2022 investigation, the DGGI found that several crypto exchanges were responsible for 70 crores, approximately $8.34 million, in tax evasion.
Meanwhile, Binance is looking at a second hefty payment to be made to Indian regulators. In June, the nation’s Financial Intelligence Unit slapped the exchange with a $2.25 million fine for failing to register its operations.
Despite the fine, sources claimed that the exchange was considering returning to India as a compliant platform and was willing to pay the fine.
The exchange was banned in January but largely dominated the Indian market prior to that. When India implemented a 30% capital gains tax and a 1% TDS on crypto profits and trades, investors rushed to the platform to bypass the added costs.
Binance had initially made its foray into India by acquiring local crypto exchange WazirX. However, it later distanced itself, claiming the acquisition was not completed, right after India’s ED initiated a money laundering investigation against WazirX.
This article first appeared at crypto.news
