The Directorate General of Goods and Services Tax Intelligence (DGGI) of India has issued a show-cause notice to Binance, demanding it to pay a penalty of up to Rs 722 crore ($86.88 million) under GST regulations. The notice states that Binance, a globally renowned cryptocurrency exchange, charged at least Rs 4,000 crore in trading fees to its Indian users without being registered under the Indian GST framework.

Rs 722 crore allegation against Binance

Binance, a dominant player in the global cryptocurrency market with at least 40% market share and operations in more than 150 countries, has come under scrutiny from Indian tax authorities for failing to register under India’s GST framework.

The company reportedly earned around Rs 4,000 crore from trading fees charged to Indian customers. With 90 million users worldwide, a large portion of whom are based in India, Binance’s revenue and operations are now under scrutiny.

The investigation revealed that the proceeds were credited to the accounts of Nest Services Limited, a subsidiary of Binance Group in Seychelles. This led to greater scrutiny of Binance’s tax practices in India.

The Ahmedabad unit of the DGGI has issued a notice of action to Binance for non-compliance with Indian regulations. The notice seeks a hefty penalty of Rs 7.22 crore ($86.88 million) under the Goods and Services Tax (GST) regulations.

Failure to respond to compliance requests

The Directorate General of Goods and Services Tax Intelligence (DGGI) of India has issued a notice to Binance, asking the company to comply with Indian GST regulations. Although the DGGI sent emails to Binance’s offices in Seychelles, Cayman Islands, and Switzerland, no response was received.

Under India’s GST law, foreign service providers are required to pay GST on services provided to Indian residents, particularly services falling under the category of Online Information and Database Access or Retrieval (OIDAR).

Recent Penalties on Binance

Earlier this year, India’s Financial Intelligence Unit (FIU) approved Binance’s registration as a Virtual Asset Service Provider (VASP). However, last month, the FIU fined Binance 180 million Indian rupees for failing to comply with anti-money laundering (AML) regulations.