The Indian government has detected goods and services tax (GST) evasion worth ₹824.14 crore (approx. $99.29 million) by cryptocurrency exchanges, including Binance, WazirX, CoinDCX, and CoinSwitch Kuber.
However, recoveries so far amount to only ₹122.29 crore (approx. $14.7 million), including penalties and interest, according to a statement by Minister of State for Finance Pankaj Chaudhary in Parliament.
Among the offenders, Binance group’s M/s Nest Services Limited accounted for the highest evasion of ₹722.43 crore (approx. $87 million), with no recovery reported to date.
WazirX, operated by Zanmai Labs Pvt. Ltd evaded ₹40.51 crore ($4.88 million), but the government has managed to recover ₹49.18 crore ($5.93 million), exceeding the evaded amount due to penalties and interest.
CoinDCX and CoinSwitch Kuber evaded ₹16.84 crores ($2.03 million) and ₹14.13 crore ($1.69 million), respectively, with recoveries of ₹20.86 crore ($2.5 million) and ₹19.38 crore ($2.33 million).
The government has strengthened its regulatory framework for cryptocurrencies, classified as “Virtual Digital Assets” (VDAs) under the Income Tax Act. These include most crypto assets but exclude gift cards and vouchers.
Income from crypto transactions is taxed at 30%, along with a 1% tax deducted at source (TDS) for transactions exceeding ₹50,000 annually.
Since March 2023, VDAs have been brought under the Prevention of Money Laundering Act (PMLA), requiring exchanges to follow anti-money laundering standards, including strict know-your-customer (KYC) procedures. Enforcement is overseen by the Financial Intelligence Unit India, and 47 Virtual Digital Asset Service Providers (VDA SPs) have been registered under the PMLA.
Although the GST Act does not define “crypto” or “digital assets,” the term “virtual digital assets” was introduced in the finance budget. The current GST rate for VDAs is 18%, categorized under the HSN code 960899, which covers miscellaneous articles. GST liability applies only to entities with turnover exceeding ₹40 lakh annually or those who voluntarily register for GST.
The regulators in the country have always remained cautious about cryptocurrencies. The Department of Financial Services Secretary M. Nagaraju and Reserve Bank of India (RBI) Governor Shaktikanta Das have often voiced skepticism, citing risks to financial stability. Governor Das emphasized that cryptocurrencies could undermine monetary control, posing serious threats to the economy.
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