Indian Authorities Demand $86 Million in Unpaid GST from Binance
- India requires cryptocurrency exchange Binance to pay $86 million in unpaid goods and services tax.
- Indian law requires a 1% TDS on cryptocurrency transactions and a 30% tax on profits.
- Binance plans to resume operations in India after being banned in January 2024 due to violations.
In a significant development, Indian authorities have mandated that cryptocurrency exchange Binance pay nearly $86 million in unpaid goods and services tax (GST).
This enforcement marks a pivotal moment as it signifies the first instance of the Indian government imposing a tax on a cryptocurrency exchange. Just a month prior, India’s financial regulator, the Financial Intelligence Unit (FIU), fined Binance 188.2 million rupees ($2.25 million) for breaching India’s anti-money laundering (AML) regulations.
India’s Cryptocurrency Tax Regulations
The Directorate General of Goods and Services Tax Intelligence (DGGI) issued the demand on August 6, highlighting the stringent enforcement of tax rules on cryptocurrency transactions in the country.
According to Indian law, all cryptocurrency service providers and investors must pay a 1% tax deducted at source (TDS) on each cryptocurrency transaction, irrespective of its value.
Furthermore, a 30% tax is imposed on all profits derived from cryptocurrency investments. These measures are aimed at ensuring tax compliance and mitigating potential tax evasion within the burgeoning cryptocurrency market.
Challenges Faced by Offshore Cryptocurrency Exchanges
While Indian exchanges like WazirX and CoinDCX have implemented systems to streamline users’ tax obligations, offshore exchanges such as Binance have been slower in enforcing these regulations.
In January 2024, Binance, along with other offshore exchanges, faced a ban in India for non-compliance with local laws. Despite this, Binance has expressed its intent to return to operations in the region after settling its tax liabilities.
The notification from DGGI underscores the government’s dedication to holding all market participants accountable, irrespective of their location, signaling a stricter regulatory environment for cryptocurrency exchanges in India.
As Binance strives to restart operations post-settlement, this case establishes a precedent for how India addresses similar issues concerning other offshore crypto platforms. The upcoming months will be critical for Binance as it navigates regulatory complexities and aims to reestablish its presence in the Indian market.
