Kraken and Bitfinex are among the seven overseas cryptocurrency exchanges that India’s Financial Intelligence Unit is currently pursuing for $345 million in unpaid goods and services tax (GST).
The Financial Intelligence Unit (FIU) of India implemented a decisive strategy to recoup $345 million in Goods and Services Tax (GST) from seven foreign crypto exchanges that are currently operating within the nation, including Kraken, Bitfinex, and MEXC Global.
After receiving numerous warnings regarding their noncompliance with India’s tax laws, these exchanges have implemented this enforcement measure.
Kraken, Bitfinex, MEXC Global, Huobi, Gate.io, Bittrex, and Bitstamp were prohibited from providing cryptocurrency services in India.
These platforms will now be required to demonstrate compliance with Indian financial regulations, particularly the Prevention of Money Laundering Act (PMLA), as part of the regulatory procedure.
Hearings will shortly determine whether these exchanges can resume operations in India, according to reports from the Economic Times.
The exchanges will be required to present their cases, demonstrating that they can fulfil the reporting obligations required under Indian law and that they are in compliance with the PMLA.
Nevertheless, adhering to these regulations alone will not ensure their return to the Indian crypto market. The exchanges are also required to pay penalties, which will be determined by the sums they submit during the proceedings.
The FIU aims to recoup approximately ₹2,900 crores, which is equivalent to $345 million, in outstanding GST liabilities.
Due to the exchanges’ failure to pay GST on transaction fees collected from Indian consumers prior to their prohibition from operating in India, the Indian government has prioritized the recovery of these taxes.
The FIU requested that Binance pay a $2.25 million sanction and $86 million in GST in order to resume its services in India earlier this year.
These foreign entities are subject to the same GST regulations as Indian enterprises. This necessitates that they register under India’s GST framework and pay taxes on services rendered to Indian clients, in the same manner as domestic exchanges.
India’s primacy in the global adoption of crypto remains undisputed, despite these regulatory obstacles. Even with a 30% crypto capital gains tax and a 1% tax deducted at source (TDS), India is the first-ranked country among 154 countries in terms of cryptocurrency usage, according to the Chainalysis 2024 Global Crypto Adoption Index.
Activity on centralized exchanges, decentralized finance (DeFi) platforms, and peer-to-peer trading has enabled India’s crypto ecosystem to persist in the face of these obstacles.
