Indian regulatory authorities issued a show cause notice to Binance, demanding a Goods and Services Tax (GST) payment of INR 722 crore (approximately $86 million) on 6 August 2024.
In a first, the Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) has targeted a crypto company, demanding a Goods and Services Tax (GST) payment.
According to the Times of India report, Binance allegedly failed to pay the GST tax, after collecting said tax from its Indian customers.
“Binance reportedly earned at least Rs 4,000 crore from transaction fees charged to Indian customers,” a Times of India source confirmed.
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Binance Challenges India’s GST Notice
Reportedly, Binance is ready to challenge the $86 million tax showcause notice, said Coindesk.
Binance appointed a local counsel in India to liaise with the authorities, marking the first step in resolving the tax compliance issue.
The world’s largest crypto exchange has a user base of 90 million users globally. The userbase includes a substantial number Indian customers too. The notice was issued to Binance for collecting fees from Indian customers trading in virtual digital assets (VDAs) on their platform, categorized under online information database access or retrieval (OIDAR) services.
Transaction fees brought in more than $476 million (40 billion rupees) for the crypto exchange.
Indian media reported that detailed investigation revealed that the earnings of these fees were credited to the account of a Binance Group Company — Nest Services Limited — based in Seychelles.
Apparently, the DGGI Ahmedabad zonal unit has also sent emails to Binance group companies in Seychelles, the Cayman Islands, and Switzerland. However, the communication did not elicit a response.
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Past Run-ins With Indian Authorities
Earlier this year, Binance re-entered the Indian market, as it received approval from India’s Financial Intelligence Unit (FIU) to register as a virtual asset service provider (VASP). However, the company was also fined $2.2 million. The fine was for non-compliance with India’s anti-money laundering (AML) regulations.
BREAKING: Binance hit with ₹722 crore GST notice 🚨🚨
Ahmedabad tax unit claims #Binance made ₹4000 crore from Indian users' fees.
This might scare off foreign exchanges from India
Looks like the govt is indirectly trying to kill #crypto here
What's next for us Indian… pic.twitter.com/iYA2wmhAji
— Budhil Vyas (@BudhilVyas) August 6, 2024
The action against Binance is not an isolated incident. Indian authorities are trying to regulate the rapidly growing virtual currency market.
The market is viewing India’s crackdown on crypto companies as a bad move, that may scare off foreign exchanges. Does it put Binance’s position in India at risk?
Binance is also facing a trial in Nigeria for alleged tax evasion, with the Nigerian Federal Inland Revenue Service (FIRS). The company is accused of evading Value-Added Tax (VAT) and Company Income Tax. The trial will begin in October 2024
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
