Binance Faces $86M Tax Demand As It Re-enters India. Read CoinChapter.com on Google News
NAIROBI (CoinChapter.com)— Binance has re-entered the Indian market, coinciding with the country’s 78th Independence Day celebration.
However, the return of one of the world’s largest cryptocurrency exchanges comes with a steep demand from Indian authorities—$86 million in unpaid tax liabilities. This tax issue remains crucial as Binance navigates its renewed presence in India’s evolving regulatory landscape.
Can Binance Overcome India’s $86M Tax Demand?
In Dec. 2023, India’s Financial Intelligence Unit (FIU) cracked down on several offshore exchanges, including Binance, for operating without proper registration. This resulted in the removal of Binance’s app from major app stores in India.
The central issue was the exchange’s failure to register as a “reporting entity,” which enabled users to bypass India’s strict tax laws, including the 1% tax deduction at source (TDS) and a 30% tax on crypto transactions.
FIU-IND penalizes Binance $2.26 million for PMLA violations. Source: FIU-IND
Despite these hurdles, Binance has taken steps to align with Indian regulations. The exchange paid a $2.25 million fine for violating Anti-Money Laundering (AML) laws and committed to adhering to tax reporting requirements moving forward.
These efforts underscore Binance’s intent to reestablish itself in the Indian market, but the $86 million tax demand is an obstacle.
Will Binance’s Return Shake Up India’s Crypto Market?
Binance’s return could set the stage for other global exchanges to enter the Indian market. However, the Indian government’s tough tax rules have already driven away over 90% of users from local exchanges like CoinDCX and WazirX.
Despite these challenges, Binance’s reentry might bring new energy to the market, as Richard Teng, Binance’s CEO, emphasized the need to align with Indian regulations.
Edul Patel advocates for regulatory frameworks in the Indian crypto space. Source: LinkedIn
While Binance’s compliance might smooth its operations, the unresolved $86 million tax demand leaves questions about its long-term future in India. Edul Patel, CEO of Mudrex, advised Indian investors to stick with FIU-compliant platforms to ensure protection against fraud.
Aravind Chandrasekaran, ex-product lead for OnMeta, suggests Binance’s return could pressure local exchanges to enhance their services but cautions about potential risks given Binance’s regulatory history.
Binance’s return to India coincides with challenges for local exchanges. WazirX recently lost $234 million in a hack. Although investor balances have been restored, users remain uncertain when to access their funds, causing frustration.
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