India’s Directorate General of GST Intelligence [DGCI] has raided several crypto exchanges operating in the country after detecting a tax evasion by Binance owned exchange WazirX two days ago. In what could be termed as a not-so-good start at the beginning of the year for the Indian crypto scene, the enforcement agency recovered around $9 million worth of tax evasion during the clamp down on the trading platforms’ premises with the help of Mumbai CGST.
As per sources, nearly half a dozen offices of cryptocurrency service providers have been searched and massive Goods and Service Tax [GST] avoidance has been discovered by the agency. The DGGI is investigating Coinswitch Kuber by M/s Bitcipher Labs LLP, CoinDCX by M/s Neblio Technologies PVT. LTD, BuyUCoin by M/S I Block Technologies Pvt. LTD., and Unocoin by M/s Unocoin Technologies Pvt. LTD. Sources revealed that the above-mentioned trading firms are providing facilitation intermediary services for buying and selling crypto coins. These services attract a GST rate of duty of 18 percent which is alleged, all of these entities have been evading.
An official source, who was part of this search team, told a news agency, these service providers were charging a commission for their facilitation to indulge in exchange of bitcoins but were not paying GST tax. These transactions were intercepted by DGGI and they were confronted with evidence that proved non-payment of GST.
Where is India’s crypto regulation heading?
After the developments, WazirX blamed the prevailing lack of clarity in the crypto regulation, while saying it’s “been diligently paying tens of crores worth of GST every month.” In their own words, the exchange noted,
There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid. However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax. That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry.
Having said that, currently, there are no clear regulations in India around how these crypto exchanges or investors would be taxed as it remains undecided if cryptocurrencies would be categorized as currencies, securities, or a type of asset.