Binance, one of the world’s largest cryptocurrency exchanges, is facing regulatory scrutiny once again. The exchange has been slapped with a notice by India’s Directorate General of GST Intelligence (DGGI), two months after it paid a $2 million fine to the Financial Intelligence Unit (FIU). The notice demands over $80 million from the cryptocurrency trading platform over tax compliance issues.
Binance to pay $86 million in GST tax
The Ahmedabad department of the DGGI last week issued a notice to Binance demanding payment of Rs 722 crore, worth around $86 million, for evading Goods and Services Tax (GST) from June 2017 to March 2024.
According to sources cited by local media outlet ETCFO, tax authorities allege that the crypto exchange collected fees from Indian customers trading virtual digital assets (VDA) on the platform without being registered under India’s GTS.
The “oversight” of registration was rewarded with scrutiny from Indian tax authorities. The DGGI investigation apparently revealed that Binance earned over Rs 4,000 crore, or $476.7 million, in transaction fees in India, which were allegedly credited to the exchange’s Seychelles-based accounts.
Sources close to the matter share investigation details. Source: ETCFO
According to the report, the DGGI sent an email to the cryptocurrency exchange group’s companies in Seychelles, Cayman Islands and Switzerland to discuss Binance’s compliance with GST regulations, but received no response.
However, the trading platform appears to have 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 India’s Goods and Services Tax rule, foreign service providers have to pay GST on services provided to customers in the country, particularly those categorized under Online Information Database Access or Retrieval (OIDAR) services.
The report suggests that other crypto exchanges operating overseas and in India could also come under scrutiny from the DGGI as the investigation continues. Moreover, tax authorities are reportedly keeping a close eye on the financial activities of marketplaces and gaming platforms for possible tax evasions.
Binance has thus become the first international cryptocurrency company to receive a formal notice from the DGGI. The move is part of the country’s efforts to strengthen its oversight of the growing sector in order to combat financial crime and protect investors’ interests.
India’s Financial Intelligence Unit (FIU) had earlier issued notices to nine foreign cryptocurrency exchanges for allegedly operating illegally in the country. In January, the FIU asked the platforms to demonstrate their regulatory compliance before being expelled from India.
In June, Binance paid a $2 million fine to Indian authorities to restore its operations in the country. The exchange was fined for providing services in the country without adhering to anti-money laundering (AML) and counter-terrorist financing (CFT) measures.
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
