India: Dull New Year for crypto as platforms to face raids over alleged tax evasion

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A local media report has con­firmed that major cryp­tocur­ren­cy ser­vice providers are under inves­ti­ga­tion in India on sus­pi­cion of pos­si­ble tax evasion.

The devel­op­ment fol­lows ear­li­er reports of indi­rect tax eva­sion by the com­pa­ny that man­ages one of the largest cryp­to exchanges in the coun­try, WazirX.

Fol­low­ing which, offi­cial sources have con­firmed to ANI that the Direc­torate Gen­er­al of GST Intel­li­gence offi­cials are search­ing oth­er cryp­to busi­ness­es for mas­sive tax eva­sion. While more details are await­ed, we know that WazirX, which is man­aged by Zan­mai Labs Pri­vate Lim­it­ed Ltd and owned by Sey­chelles-based Binance, is under fire for alleged eva­sion of 400 mil­lion rupees in goods and ser­vices tax (GST) .

In this regard, the finance min­istry has not­ed,

“The GST Mum­bai East Com­mis­sion­er­ate of Mum­bai Zone, while inves­ti­gat­ing the busi­ness activ­i­ties of cryp­tocur­ren­cy exchange WazirX have detect­ed GST Eva­sion of Rs 40.5 Crores. The Com­mis­sion­er­ate has also recov­ered Rs 49.20 Crores in cash per­tain­ing to GST evad­ed, inter­est and penalty.”

What went down?

In WazirX’s case, the reg­u­la­tors have detect­ed dis­crep­an­cies in com­mis­sions charged for trans­ac­tions involved in fiat-cryp­to trans­ac­tions. It was found that,

“[WazirX] was pay­ing GST only on com­mis­sion earned in rupee but was not pay­ing GST on com­mis­sion earned in WRX.”

It is worth not­ing that the Min­istry of Finance has reit­er­at­ed in its press release that the GST at the rate of 18% is applic­a­ble on this trans­ac­tion fees. It has also explained that probe is ‘a part of the spe­cial anti-tax eva­sion dri­ve, which relies on inten­sive data min­ing and data ana­lyt­ics, ini­ti­at­ed by the CGST Mum­bai Zone.’ The release fur­ther stat­ed,

“The offi­cers of CGST Mum­bai zone are inves­ti­gat­ing busi­ness trans­ac­tions relat­ed to emerg­ing eco­nom­ic space like e‑commerce, online gam­ing, Non-Fun­gi­ble Tokens to iden­ti­fy the areas of pos­si­ble tax evasion.”

Also not­ing that the CGST depart­ment will probe all cryp­tocur­ren­cy exchanges falling in the Mum­bai zone and will also “inten­si­fy this dri­ve in the com­ing days.”

These are cru­cial devel­op­ments as the coun­try is still wait­ing for a leg­isla­tive frame­work that can pro­vide clear guid­ance to the play­ers in the sec­tors. In a mar­ket with an esti­mat­ed 15 mil­lion cryp­to hold­ers, the watch­dogs have grown strin­gent lately.

It is esti­mat­ed that Indi­ans now hold close to $6.6 bil­lion in cryp­to assets



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