The Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) in India has issued a show-cause notice to a prominent cryptocurrency exchange, demanding a staggering $86.88 million (₹722 crore) in Goods and Services Tax (GST) payments.
This unprecedented action marks the first time the DGGI has targeted a cryptocurrency firm, setting a significant precedent in India’s regulatory landscape for virtual currencies.
The notice is linked to the exchange’s handling of transaction fees from Indian customers trading in virtual digital assets (VDAs), which fall under online information database access or retrieval (OIDAR) services.
Despite the firm’s approval earlier this year from India’s Financial Intelligence Unit (FIU) to operate as a virtual asset service provider (VASP), it had previously evaded compliance with anti-money laundering (AML) regulations, resulting in an ₹18 crore penalty last month.
The cryptocurrency giant, known for its substantial global market share and extensive operations, had not registered under the Indian GST framework—a serious oversight that has now drawn the ire of Indian tax authorities.
Reports by the local news reveal that the firm generated at least ₹4,000 crore from transaction fees charged to its Indian clientele. Furthermore, earnings from these fees were allegedly channeled to an overseas group company, complicating the tax landscape.
In response to the notice, the company appointed local legal counsel in India to address the issue, marking the beginning of a resolution process. Meanwhile, the DGGI has also reached out to the firm’s group companies abroad, though these attempts have so far been unresponsive. The company is already entangled in a tax evasion trial in an African court, adding to its legal woes.
The DGGI’s move reflects a broader crackdown on foreign service providers operating in India, particularly within the OIDAR category.
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