Anika Begay
Binance, one of the world’s largest cryptocurrency exchanges, is facing regulatory scrutiny once again. The exchange has been hit with a summons from India’s Directorate General of GST Intelligence (DGGI) two months after it paid a $2 million fine to the Financial Intelligence Unit (FIU). The summons demands over $80 million from the cryptocurrency trading platform over tax compliance issues.
Binance Faces $86 Million GST Tax Bill
Last week, the Ahmedabad branch of the DGGI issued a summons to Binance demanding payment of Rs 722 crore, or approximately $86 million, for evasion of Goods and Services Tax (GST) from June 2017 to March 2024.
According to sources quoted by local news agency ETCFO, tax authorities allege that the cryptocurrency exchange collected fees from Indian customers who traded virtual digital assets (VDA) on the platform without being registered under India’s GTS framework.
The registration “surveillance” has caught the attention of India’s tax authority. The DGGI investigation has apparently revealed that Binance earned over Rs 4,000 crore, worth $476.7 million, in transaction fees in India, reportedly credited to the Seychelles-based exchange’s accounts.
Sources close to the matter share investigation details. Source: ETCFO
According to the report, DGGI sent an email to the group’s cryptocurrency exchange companies in the Seychelles, Cayman Islands, and Switzerland to discuss Binance’s GST compliance, but did not receive any response.
However, the trading platform has apparently appointed a local lawyer to mediate with Indian tax authorities, “marking the first step towards resolving this important tax compliance issue.”
India’s regulatory efforts continue
Under the Indian Goods and Services Tax (GST) law, foreign service providers are required to pay GST on services provided to customers within the country, particularly those classified as Online Database Access or Retrieval (OIDAR) services.
The report suggests that other cryptocurrency exchanges operating abroad and in India may also come under scrutiny by the DGGI as the probe continues. Additionally, tax authorities are allegedly closely monitoring the financial activities of marketplaces and gaming platforms for possible tax evasion.
As a result, Binance has become the first international cryptocurrency company to receive a summons from the DGGI. The action is part of the country’s efforts to strengthen oversight of the rapidly growing sector to combat financial crimes and protect investors’ interests.
Earlier, India’s Financial Intelligence Unit (FIU) had issued summonses to nine overseas cryptocurrency exchanges for alleged illegal activity in the country. In January, the FIU asked the platforms to prove their compliance with the regulations before being removed from India.
In June, Binance paid a $2 million penalty to Indian authorities to re-establish its operations in the country. The exchange was fined for providing services in the country without complying with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
Binance Coin (BNB) is trading at $477 in the three-day chart. Source: BNBUSDT on TradingView
Featured image from Unsplash.com, chart from TradingView.com
