DGGI raids cryptocurrency exchanges

The Directorate General of GST Intelligence (DGGI) has prosecuted a half-dozen cryptocurrency exchanges in India for tax evasion. The DGGI is looking into whether big cryptocurrency exchanges in the country are evading their GST obligations.

The DGGI is currently examining key cryptocurrency exchanges in the country, according to reports. Coinswitch Kuber, CoinDCX, BuyUCoin, and Unocoin are among them.

“The DGGI is looking into Coinswitch Kuber, which is run by M/s Bitcipher Labs LLP, CoinDCX, which is run by M/s Neblio Technologies PVT. LTD., BuyUCoin, which is run by M/S I Block Technologies PVT. LTD., and Unocoin, which is run by M/s Unocoin Technologies PVT. LTD.,” sources told news agency ANI.

According to reports, tax avoidance is occurring in all, if not most, of the exchanges under investigation by the body. According to sources, almost Rs 70 crore in tax fraud has been discovered thus far.

“Approximately half a dozen offices of cryptocurrency service providers have been examined, and DGGI has identified huge goods and service tax (GST) evasion,” according to an ANI report.

The probe comes after WaxirX, one of India’s other major cryptocurrency exchanges, was shut down. The company’s business activities were scrutinised by the GST Mumbai East Commissionerate of Mumbai Zone, and the company was found to be guilty of tax evasion. The GST office discovered Rs 40.5 crore in GST evasion and recovered Rs 49.2 crore in cash from the corporation to cover the GST amount owed, plus interest and penalties.

According to a press release, “the CGST department will cover all cryptocurrency exchanges in the Mumbai zone and will accelerate this drive in the coming days.”

The exchanges were committing tax fraud by failing to pay GST on commission fees collected from their consumers.

“They facilitate the buying and selling of crypto currencies by acting as an intermediary.” Official sources told The Economic Times that these services are subject to an 18% GST rate of charge, which they have all been avoiding.

WazirX, for example, offered consumers to trade using either its own cryptocurrency, WRX, or the rupee. While the corporation received a fee on both, the commission rates for each method were different.

However, the corporation only paid GST on the commissions it received on transactions conducted in rupees, not on those conducted in WRX. Because the commission was paid to both the buyer and the seller in the form of trading fees, deposit fees, and withdrawal costs, the total quickly grew to a staggering amount.