Crypto Quill

GST authorities have launched an investigation into 17 crypto exchanges accused of evading GST worth INR 824 crore. This crackdown highlights the increasing regulatory scrutiny on the cryptocurrency sector in India.

The Indian crypto landscape is facing a significant challenge as 17 exchanges are under investigation for allegedly evading Goods and Services Tax (GST) totaling INR 824 crore. The crackdown, revealed in a written response to the Lok Sabha by Pankaj Chaudhary, Minister of State (MoS) for Finance, has already led to the recovery of INR 122.29 crore, including penalties and interest. This move signals the government’s intent to ensure crypto platforms comply with tax regulations.

Binance Subsidiary Leads the Alleged Evasion

Among the crypto giants involved, Binance’s subsidiary Nest Services stands out, accounting for a staggering 87% of the total tax evasion, which amounts to INR 722.43 crore. The discovery has raised eyebrows, especially as Binance continues to grapple with regulatory hurdles in multiple countries.

Meanwhile, the parent company of WazirX, Zanmai Labs, is under the spotlight for owing INR 40.51 crore in GST. CoinDCX, another major platform, along with its FIU-registered entity Neblio Technologies, is facing charges of evading INR 26.63 crore in GST payments.

Crypto exchanges in India are grappling with a series of investigations and increased scrutiny as authorities move aggressively to clamp down on tax evasion.

Other Platforms in the Spotlight

While Binance’s subsidiary leads the pack, other exchanges are also facing serious charges of evading GST payments:

• CoinSwitch Kuber: Alleged tax evasion of INR 14.13 crore.
• ZebPay: Under investigation for evading INR 7 crore.
• BuyUcoin, UnoCoin, Flipvolt Technologies, and others are also implicated, making the list of 17 crypto platforms currently under investigation quite extensive.

The investigations are not limited to exchanges alone. Four investors in virtual assets have been scrutinized for evading INR 1.76 crore in GST. However, the authorities have already recovered INR 2.4 crore from these investors, underscoring the government’s resolve to tackle tax evasion in the cryptocurrency sector.

Growing Regulatory Burden on the Crypto Sector

The GST evasion cases are part of a broader regulatory framework that is evolving rapidly around virtual digital assets (VDAs). The Financial Intelligence Unit of India (FIU-IND) oversees this space, ensuring compliance with the Prevention of Money Laundering Act (PMLA) and other regulations aimed at curbing financial crimes.

As of now, 47 VDA service providers have registered as reporting entities with the finance ministry’s FIU-IND. This registration is mandatory for crypto exchanges operating in India. However, as the investigations and GST liabilities continue to mount, the regulatory burden is expected to increase significantly.

Table of Major Crypto Platforms Under Scrutiny

Crypto Exchange	Alleged GST Evasion (INR)	Status
Nest Services (Binance)	722.43 Cr	Under investigation
Zanmai Labs (WazirX)	40.51 Cr	Under investigation
CoinDCX	26.63 Cr	Under investigation
CoinSwitch Kuber	14.13 Cr	Under investigation
ZebPay	7 Cr	Under investigation
Other Exchanges	Varies	Under investigation

The continued scrutiny and regulatory developments may disrupt the operations of these crypto platforms, particularly as GST liabilities mount, which could lead to higher operational costs in the long term.