Global crypto exchange behemoth Binance is reportedly facing goods and service tax (GST) issues in India, according to sources.
The zonal unit of the Directorate General of GST Intelligence (DGGI) of Ahmedabad, has issued a show cause letter to the exchange demanding 7.22 billion rupees ($86 million) under GST.
The move is aimed at regulating the digital currency market, per a report from the Times of India.
Binance reportedly collected fees from Indian users for trading virtual digital assets (VDAs) on their platform. As a result, the notice was issued under the online information database access or retrieval (OIDAR) services.
OIDAR under GST refer to services delivered over the internet with minimal human intervention. Such services are subject to specific rules and regulations under the GST regime in India.
“Binance reportedly earned at least 40 billion rupees ($476.8 million) from transaction fees charged to Indian customers,” a top source close to the development, told the publication.
“Detailed investigations revealed that the earnings of these fees were credited to the account of a Binance Group Company – Nest Services Limited – based in Seychelles.”
Binance’s Tax Compliance Issue
Further, the zonal GST intelligence arm sent emails to Binance group companies in Seychelles, the Cayman Islands and Switzerland, to make the exchange GST compliant. However, DGGI did not receive a response from Binance and its affiliated companies, the report added.
Sources confirmed that Binance later appointed a local counsel to liaise with the DGGI on the tax compliant issue.
In May, the Financial Intelligence Unit of India (FIU) revealed that Binance has successfully registered with the regulatory body. However, the company faced fine of 188.2 million rupees ($2.25 million) for non-compliance with local anti-money laundering (AML) regulations.
Following Binance’s tax non-compliance, the DGGI is also closely monitoring financial transactions and activities of online gaming platforms and marketplaces.
