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 Recovers $14.7 Million in Crypto Tax Crackdown
According to an Economic Times reportMinister of State for Finance Pankaj Chaudhary revealed in a written reply to the Lok Sabha that investigations have been launched into these companies.
The investigation has already led to 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 accusations of evading $4.9 million, CoinDCX is accused of evading $2 million, and CoinSwitch Kuber is linked to $1.7 million in GST evasion.
The agency is also investigating four cryptocurrency investors who were found to have evaded $210,000 in GST. Authorities have already recovered $290,000 from these individuals, which covers taxes, fines and interest.
Chaudhary also highlighted the government’s increasing efforts to regulate the cryptocurrency sector, noting that 47 virtual digital asset service providers (VDA SP) have been registered as reporting entities with the Financial Intelligence Unit of India under the Act. of Prevention of Money Laundering of 2002.
This is not the first time the government has acted against crypto exchanges. In 2021-22, 11 platforms were sanctioned for tax evasion, and $1.08 million in unpaid taxes were identified. At that time, authorities successfully recovered $1.2 million, including penalties.
Crackdown on Binance tax evasion
This report comes months after Indian law enforcement agencies demanded around $86 million in unpaid taxes from Binance in August.
Binance and several other offshore crypto exchanges were banned in India in January 2024 for failure to comply with local regulations. However, in April, the exchange announced its intention to resume operations in the country after settling pending taxes.
Despite this, in August 2024, the Directorate General of Goods and Services Tax Intelligence (DGGI) demanded $86 million from Binance under the GST.
According to The Times of India, the platform would have earned $480 million from transaction fees charged to Indian customers. Investigations revealed that these profits were credited to an account belonging to Nest Services Ltd.
Authorities also sent email notices to Binance offices in Seychelles, the Cayman Islands and Switzerland, which the exchange initially ignored. Binance subsequently appointed a local lawyer to address 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. Additionally, all gains from cryptocurrency investments are subject to a 30% tax.
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