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Cryptocurrency exchange Binance has challenged a
substantial $86 million tax show cause notice by India’s tax authorities,
Coindesk reported, citing sources familiar with the matter. This notice, a preliminary step in suspected tax
evasion cases, marks a significant move by India’s Directorate General of Goods and Services Tax Intelligence (DGGI) against an international crypto player.
Background of the Notice
India’s DGGI, particularly the Ahmedabad chapter,
issued the showcause notice to Binance last week. This action signified the
authority’s first formal accusation against Binance, alleging the collection of
fees from Indian customers trading on its platform between July 2017 and March
2024.
DGGI’s actions previously targeted domestic
crypto exchanges, making this an unprecedented move against a global entity. A
spokesperson for Binance stated that the company is reviewing the details of
the notice and is fully cooperating with the Indian tax authorities.
This isn’t the first time Binance has clashed with Indian regulators. In June 2024, Binance faced a $2.2 million fine for
providing services to Indian clients without adhering to anti-money laundering
regulations.
This fine came alongside the Financial Intelligence Unit’s (FIU) approval of Binance as a registered entity. However, the ongoing DGGI investigation operates independently from the FIU’s oversight.
Potential Outcomes
Earlier this month, similar allegations against
Infosys were partially dropped after the company challenged the demand.
Binance’s case could follow a similar trajectory depending on the forthcoming
legal proceedings and the company’s defense.
According to the Economic Times, Binance is reported
to have earned over $476 million (40 billion rupees) in transaction fees, which
were allegedly transferred to a Binance Group company, Seychelles-based Nest
Services. These earnings are central to the DGGI’s claim of tax evasion.
The fees in question fall under Online Information and
Database Access or Retrieval Services (OIDAR), which are services provided
through the Internet without physical interaction between the provider and
recipient. Despite these challenges, Binance maintains its commitment to comply
with domestic laws.
In June, Binance announced plans to re-enter India
after the Financial Intelligence Unit fined the exchange an estimated $2.25
million for allegedly breaching anti-money laundering laws. The crypto exchange was one of nine major global
crypto exchanges blocked by FIU in an order mandating Apple and Google remove
local access to these digital asset exchanges.
This article was written by Jared Kirui at www.financemagnates.com.
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