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The Indian GST authorities have detected significant evasion by 17 cryptocurrency platforms, with cases of evaded GST totaling Rs 824.14 crore, including major exchanges like Binance, WazirX, CoinDCX, and CoinSwitch Kuber.

In a written response to Parliament on December 2, 2024, Minister of State for Finance Pankaj Chaudhary revealed that authorities had uncovered a massive tax evasion case involving Nest Services Ltd, a subsidiary of the Binance Group. The company alone was found to be evading Rs 722.43 crore in Goods and Services Tax (GST).

Breakdown of the Evasion Cases

The list of crypto platforms under investigation is extensive. Zanmai Labs Pvt, the parent company of WazirX, was found to have evaded Rs 40.51 crore in GST, while CoinDCX’s evasion stood at Rs 16.84 crore. CoinSwitch Kuber was also under the scanner for evading Rs 14.13 crore. In total, the GST authorities have made recoveries amounting to Rs 122.29 crore, including taxes, penalties, and interest.

In addition to exchanges, the authorities have also investigated four individual investors dealing in virtual digital assets (VDAs). These investors were found to have evaded Rs 1.76 crore in GST, though Rs 2.40 crore has been recovered from them through taxes and penalties.

Government’s Efforts to Regulate the VDA Sector

The government is making efforts to monitor the Virtual Digital Asset (VDA) sector more closely. To date, 47 VDA service providers have registered as reporting entities with India’s Financial Intelligence Unit (FIU-IND) under the Prevention of Money Laundering Act (PMLA) of 2002. This move is part of the government’s strategy to regulate the sector and ensure compliance with tax and anti-money laundering laws.

As the crypto market continues to grow in India, these efforts highlight the increasing scrutiny on exchanges and investors within the sector. The focus on GST evasion underscores the government’s commitment to ensure that all sectors, including digital currencies, comply with tax laws.

Finn Wells

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