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Binance, one of the largest crypto exchanges in the world, is facing regulatory scrutiny again. The exchange has been slammed with a show-cause notice from India’s Directorate General of GST Intelligence (DGGI) two months after paying a $2 million fine to the Financial Intelligence Unit (FIU). The notice demands over $80 million from the crypto trading platform for tax compliance issues.
Binance Faces $86 Million GST Tax Bill
The Ahmedabad department of the DGGI issued a show-cause notice to Binance last week demanding a payment of Rs 722 crore, worth around $86 million, for Goods and Services Tax (GST) evasion from June 2017 to March 2024.
According to sources cited by local news outlet ETCFO, the tax authorities allege that the crypto exchange has collected fees from Indian customers trading virtual digital assets (VDAs) on the platform without being registered under the Indian GTS framework.
The registration “oversight” awarded the Indian tax authority’s scrutiny. The DGGI’s investigation seemingly revealed that Binance earned over Rs 4,000 crore, worth $476.7 million, in transaction fees in India, reportedly credited to the exchange’s accounts based in Seychelles.
Sources close to the matter share investigation details. Source: ETCFO
Per the report, the DGGI emailed the crypto exchange’s group companies in Seychelles, the Cayman Islands, and Switzerland to discuss Binance’s compliance with GST regulations but received no response.
However, the trading platform seemingly appointed a local counsel to mediate with the Indian tax authorities, “marking the first step towards resolving this significant tax compliance issue.”
India’s Regulatory Efforts Continue
Under India’s Good and Services Tax rule, foreign service providers must pay GST for the services provided to customers within the country, especially those categorized under online information database access or retrieval (OIDAR) services.
The report suggests that other crypto exchanges operating overseas and within India could also face scrutiny from the DGGI as the investigation continues. Moreover, the tax authorities are allegedly closely monitoring marketplaces and gaming platforms’ financial activities for possible tax evasion.
As a result, Binance became the first international crypto firm to receive a show-cause notice from the DGGI. The action is part of the country’s efforts to tighten its oversight of the rapidly growing sector to fight financial crime and protect investors’ interests.
Previously, India’s Financial Intelligence Unit (FIU) issued show-cause notices to nine crypto exchanges overseas for allegedly operating illegally within the country. In January, the FIU asked the platforms to demonstrate their compliance with regulations before they were 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 adhering to anti-money laundering (AML) and combating the financing of terrorism (CFT).
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
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