Binance faces ₹722 crore GST demand for failing to register transactions in India.
DGGI accuses Binance of channeling earnings to Seychelles, complicating tax issues.
Binance previously fined ₹18 crore by India’s FIU for anti-money laundering lapses.
Binance, one of the world’s leading cryptocurrency exchanges, faces a hefty demand for Goods and Services Tax (GST) payments, as announced earlier by Wise Advice in a recent X post. The Directorate General of Goods and Services Tax Intelligence (DGGI) in Ahmedabad has issued a show-cause notice to the global giant, seeking approximately ₹722 crore ($86.88 million).
₹722 crore GST Notice to Binance 🚨🚨The Ahmedabad unit of DGGI issued a Rs 722 crore GST demand from #Binance.It has been assumed that Binance has earned over Rs. 4000 crore from transaction fees charged to Indian customers.This'll now disincentivize the foreign exchanges… pic.twitter.com/GXn8waacy8
— Wise Advice (@wiseadvicesumit) August 6, 2024
In addition, the DGGI’s notice alleges that Binance accrued nearly ₹4,000 crore from transaction fees from Indian customers without adhering to the GST registration requirements in India. The scrutiny follows Binance’s significant user base in India, which contributes notably to its global operations spanning over 150 countries with a 40% market share in the crypto community.
The investigation showed that these earnings were allegedly channeled to Nest Services Limited, a company within the Binance Group based in Seychelles, further complicating the tax compliance issues.
Earlier this year, Binance received approval from India’s Financial Intelligence Unit (FIU) to operate as a virtual asset service provider following a long suspension due to accusations of unauthorized activities.
However, this approval came with its challenges. Just last month, India’s Financial Intelligence Unit (FIU) imposed a ₹18 crore ($2.25 million) fine on Binance for reportedly failing to adhere to anti-money laundering regulations while operating in the country.
The recent GST demand has added more financial and regulatory challenges for Binance, which has not yet replied to the DGGI’s inquiries sent to their offices in Seychelles, the Cayman Islands, and Switzerland.
The DGGI’s firm stance on enforcing GST compliance could serve as a deterrent to other foreign service providers considering the Indian market. Under Indian law, foreign entities must pay GST on services offered to Indian residents, specifically categorized under the Online Information and Database Access or Retrieval (OIDAR) services.
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