Crypto Exchange Binance Gets INR 722 Cr GST Demand Notice

SUMMARY

Binance has received a show-cause notice from the DGGI for payment of GST worth INR 722 Cr

The tax demand pertains to INR 4,000 Cr transaction fees collected by Binance from Indians trading on the platform

This comes just days after the FIU slapped an INR 18.82 Cr fine on the crypto exchange for violating anti-money laundering laws

Days after being fined INR 18.82 Cr for skirting anti-money laundering laws, crypto exchange Binance has received an INR 722 Cr GST notice on the fees collected from Indian customers trading on its platform.

Binance has received a show-cause notice from the Ahmedabad zonal unit of the Directorate General of Goods and Services Tax Intelligence (DGGI) for payment of GST of INR 722 Cr for allegedly collecting INR 4,000 Cr in transaction fees from Indian customers, the Times of India reported, citing multiple sources.

The report added that the funds raised via transaction fees were routed to Nest Services Limited, a subsidiary of the Binance Group.

As per a separate report by Coindesk, the GST notice has been sent for the July 2017 to March 2024 period.

This is the first time when Indian GST authorities have issued such a notice on a foreign exchange platform for alleged tax evasion.

Commenting on the development, a spokesperson for Binance said, “We are fully cooperating with Indian authorities to address any concerns.” The spokesperson added that the Binance is committed to adhering to the applicable Indian laws.

This comes at a time when India has intensified its crackdown on foreign crypto exchanges for alleged non-compliance with the Prevention of Money Laundering Act, 2022 (PMLA).

In December last year, the Finance Intelligence Unit (FIU) of the finance ministry issued show cause notices to nine offshore crypto exchanges – including Binance, KuCoin and Bitfinex among others – for allegedly illegally operating in the country.

These foreign crypto exchanges were not registered with FIU as virtual asset service providers in India, and therefore, violated anti-money laundering norms by operating in the country.

The Centre blocked access to these exchanges in January. While KuCoin has paid a penalty of INR 35 Lakh for past non-compliances, Binance will need to cough up INR 18.82 Cr to restart operations in India.

It was also earlier reported that the FIU had cleared applications of Binance and Kucoin to operate as virtual asset service providers in India.