Binance Hit With $86 Million Fine For Tax Compliance In India

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As a seasoned analyst with extensive experience navigating the complex world of digital assets and regulatory landscapes, I find myself closely following the ongoing saga between Binance and India’s Directorate General of GST Intelligence (DGGI). Having witnessed similar situations unfold across multiple jurisdictions, I can’t help but draw parallels between this case and a game of chess – with each move made by both parties influencing the broader narrative.

Binance, a major global cryptocurrency exchange, is under regulatory review once more. Recently, it received a warning from India’s Directorate General of Goods and Services Tax Intelligence (DGGI) approximately two months after paying a $2 million penalty to the Financial Intelligence Unit (FIU). The warning requires Binance to pay around $80 million for tax-related concerns.

Binance Faces $86 Million GST Tax Bill

Last week, the Ahmedabad branch of the DGGI served Binance with a notice asking them to explain why they shouldn’t pay approximately Rs 722 crore, or about $86 million, as a result of not properly paying Goods and Services Tax (GST) from June 2017 to March 2024.

As a researcher, based on reports from local news source ETCFO, it appears that tax officials claim I have been charging fees from Indian clients who trade virtual digital assets (VDAs) on my platform, yet I am not duly registered within India’s Goods and Services Tax (GST) framework.

Neglecting proper registration led to increased attention from the Indian tax authorities towards Binance. The DGGI’s investigation apparently uncovered that Binance generated more than Rs 4,000 crore (approximately $476.7 million) in transaction fees within India, which were allegedly deposited into accounts associated with Binance’s headquarters located in Seychelles.

Binance Hit With $86 Million Fine For Tax Compliance In India

According to the report, the DGGI sent emails to the associated firms of the cryptocurrency exchange, located in Seychelles, the Cayman Islands, and Switzerland, regarding Binance’s adherence to Goods and Services Tax (GST) rules. However, there was no reply received from them.

As a crypto investor, I’ve noticed that our trading platform appears to have engaged a local legal representative to liaise with the Indian tax authorities. This move signifies the beginning of addressing a substantial tax compliance matter.

India’s Regulatory Efforts Continue

In compliance with India’s Goods and Services Tax regulation, foreign companies offering services such as online information databases and retrieval within the country are obligated to pay GST for their services rendered to local customers, particularly those classified under Online Information Database Access and Retrieval (OIDAR) services.

1. It’s indicated in the report that additional crypto trading platforms based abroad and in India might come under review by the DGGI during the ongoing probe. Furthermore, it’s said that tax officials are vigilantly watching over transactions within marketplaces and gaming platforms to detect any signs of potential tax fraud.

Consequently, Binance was issued a formal inquiry by the DGGI, making it the initial global cryptocurrency company to receive such notice. This move forms part of the nation’s strategy to strengthen supervision over the swiftly expanding industry in order to combat financial misconduct and safeguard investors’ rights.

Earlier, India’s Financial Intelligence Unit (FIU) sent nine foreign cryptocurrency exchanges a notice, questioning why they were allegedly conducting illegal activities within the country. Back in January, the FIU requested these platforms to prove that they are adhering to regulations before they could be banned from operating in India.

In June, Binance agreed to pay a $2 million fine to Indian officials to resume its business activities within the nation. The exchange was penalized for offering services in the country without following regulations related to anti-money laundering (AML) and countering financing of terrorism (CFT).

Binance Hit With $86 Million Fine For Tax Compliance In India

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2024-08-07 10:15