Binance, WazirX Named in India’s $97M Crypto Tax Investigation: Report

India’s crackdown on tax evasion by cryptocurrency
exchanges uncovered nearly $97 million in unpaid goods and services tax (GST). Among
the companies named are major players Binance and WazirX.

The country’s Minister of State for Finance, Pankaj
Chaudhary, revealed that investigations into 17 cryptocurrency firms have
uncovered widespread tax non-compliance. According to the report by the Economic Times, of the
$97 million in evaded taxes, approximately $14 million has been recovered
through penalties, interest, and settlements.

A Broader Crackdown

WazirX, a well-known Indian exchange, accounted for
$4.8 million of unpaid GST but has reportedly paid an additional 20% in
penalties, bringing its total settlement to $5.8 million.

Other firms like CoinDCX and CoinSwitch Kuber were
also implicated but promptly paid their dues. However, Binance, the world’s
largest crypto exchange, has yet to settle its colossal $85 million tax bill.

This tax evasion scandal is part of a larger push by
India to regulate its booming crypto industry. In 2022, the government
introduced stringent crypto tax rules, including a 30% flat tax on gains and a
1% tax deductible at source for every crypto transfer.

These measures aim to ensure better transparency and
compliance but have drawn criticism for their harshness. Crypto investors also
face significant hurdles under the new regime.

Losses in digital assets cannot be offset against
gains, and gifts in cryptocurrency are taxable in the recipient’s hands. The
lack of clear implementation guidelines for non-exchange wallets has reportedly
complicated the matters.

Potential of CBDCs

While tightening tax regulations, India is also
exploring the potential of central bank digital currencies. The Reserve Bank of India plans to launch a
digital rupee in the coming year, positioning it as a boost to the digital
economy and an efficient alternative to traditional currency management.

The Indian government specified in its crypto tax law
that the 30% levy will be available on the transfer of virtual assets from the
financial year 2022-2023. According to Finance Minister Nirmala Sitaraman: “Any
income from virtual digital assets is taxable at 30 percent.”

Additionally, the regulation does not provide tax deductions or exemptions for crypto income available to Indian taxpayers. And
any gifts made in cryptocurrency are taxable.

This article was written by Jared Kirui at www.financemagnates.com.