Binance, WazirX and other crypto firms accused of tax evasion in India: report

India’s Goods and Services Tax (GST) authorities have reported a $99.1 million tax evasion case involving 17 cryptocurrency exchanges operating in the country.

Nest Services Ltd., a company linked to Binance Group, stands out as one of the biggest offenders. The company is accused of evading $86.8 million in GST.

India claws back $14.7 million in crypto tax crackdown

According to a report in the Economic Times, Minister of State for Finance Pankaj Chaudhary revealed in a written reply in the Lok Sabha that investigations have been initiated into these companies.

The investigation has already resulted in the recovery of $14.7 million in taxes, penalties and interest, and more recoveries are expected as authorities continue their investigation. Among the other exchanges under scrutiny, Zanmai Labs Pvt (WazirX) faces allegations of evading $4.9 million, CoinDCX is accused of evading $2 million, and CoinSwitch Kuber is linked with $1.7 million in GST evasion.

The agency is also investigating four crypto investors who were found to have evaded $210,000 in GST. Authorities have already recovered $290,000 from those people, which covers taxes, penalties and interest.

Chaudhary also highlighted the government’s growing efforts to regulate the cryptocurrency sector, noting that 47 virtual digital asset service providers (SP VDAs) have registered as reporting entities with the Financial Intelligence Unit of of India under the Prevention of Money Laundering Act, 2002.

This is not the first instance of the government taking action against crypto exchanges. In 2021-22, 11 platforms were penalized for tax evasion, with $1.08 billion in unpaid taxes identified. At that time, authorities successfully recovered $1.2 million, including penalties.

Binance Tax Evasion Crackdown

This report comes months after Indian law enforcement agencies sued Binance for about $86 million in unpaid taxes in August.

Binance and several other offshore crypto exchanges were banned in India in January 2024 for non-compliance with local regulations. However, in April, the stock exchange announced its intention to resume operations in the country after settling outstanding taxes.

Despite this, in August 2024, the Directorate General of Goods and Services Tax Intelligence (DGGI) demanded $86 million in GST from Binance.

According to The Times of India, the platform had earned $480 million from transaction fees charged to Indian customers. Investigations revealed that these earnings were credited to a Nest Services Ltd account.

Authorities also sent email notices to Binance offices in the Seychelles, the Cayman Islands and Switzerland, which the exchange initially ignored. Binance later appointed a local advisor to deal with its tax obligations.

India requires all crypto service providers and investors to pay a 1% tax deducted at source (TDS) on every transaction, regardless of its value. In addition, all profits from crypto investments are subject to a 30% tax.

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