India: Authorities detect tax evasion of $700 million; investigating top exchanges

Namrata Shukla
Source: Pixabay

India wanted to regulate crypto but it had to postpone its plans as the crypto draft bill did not make it to the final winter session of the Parliament. Now that the crypto businesses and users were relieved that at least steps were being considered to regulate the space, the authorities have found another concerning matter on their hands.

As per reports, the Directorate General of GST Intelligence came down heavily on cryptocurrency exchanges operating in the country. According to sources,

“Around half dozen offices of Cryptocurrency Service providers have been searched and massive Goods and Service Tax (GST) evasion has been detected by DGGI.”

The source claimed that around Rs 70 crore [$70 million] worth of tax evasion has been detected during the crackdown on the crypto trade by Mumbai CGST and DGGI. The exchanges under investigation were Coinswitch Kuber, CoinDCX, BuyUCoin, and Unocoin.

The sources added,

“They are providing facilitation intermediary services for buying and selling of crypto coins. These services attract GST rate of duty of 18 percent which all of them have been evading.”

While another source, part of the search told ANI that the service providers were charging a “commission for their facilitation to indulge in exchange of bitcoins but were not paying GST tax.”

They added,

“These transactions were intercepted by DGGI and they were confronted with evidence that proved non-payment of GST.”

Earlier in 2021, the DGGI had also charged crypto exchange WazirX on similar lines. The exchange had to pay Rs 49.20 crore [~$500 million] to the authorities for violating GST laws, interest, and penalty.

The three exchanges have remained popular in India and serve a vast user base. As the DGGI moves ahead with its investigation, the regulatory climate may also have changed as the authorities also plan to charge the crypto users.