Govt Detects GST Evasion Worth Rs.81.5 Crore from Leading Crypto Exchanges

In response to a written question, Pankaj Chaudhary, Minister of State for Finance, informed Parliament that the central government has recovered a total of Rs.95.86 Cr from 11 of India’s biggest cryptocurrency exchanges. Among these crypto exchanges are CoinDCX and WazirX, among others.

According to Chaudhary, the authorities discovered an evasion worth Rs.81.54 crore. The statement did not provide a schedule for these investigations. The government does not collect data on the number of crypto exchanges in the country, according to the MoS Finance.

According to the government‘s list, the highest GST evasion was discovered at WazirX parent company Zanmai Labs Pvt. Ltd. The government discovered an evasion worth Rs.40.51 crore and recovered Rs.49.18 crore, including interest and penalties.

In December 2021, the Central Goods and Services Tax (CGST) department, which is part of the Central Board of Indirect Taxes and Customs (CBIC), discovered GST evasion of 40.5 crore at WazirX, based on commission generated by the crypto exchange. According to Sources, the GST Mumbai Commissionerate claimed in a statement that cash worth Rs.49.20 Cr pertaining to GST evasion, interest, and penalty were also collected.

According to the Commissionerate’s news statement, the Binance subsidiary WazirX has been charging a commission on each cryptocurrency transaction from both the buyer and seller. However, the commission rate in WRX trades is only half that of INR transactions.

Transactions in Rupeees incur a 0.2 percent commission, whereas transactions in WRX incur a 0.1 percent commission.

“It was discovered throughout the examination that the firm utilised to collect revenue from the commission as trading, deposit, and withdrawal fees.” It paid GST solely on commission earned in rupees but not on commission made in WRX,” the Commissionerate stated in a statement.

A WazirX spokeswoman informed that there was an ambiguity in interpreting one of the components, resulting in a differing computation of GST paid. “However, in order to be cooperative and compliant, we voluntarily paid additional GST.” There was never any intention of evading taxes, and there still isn’t.”

Since then, the DGGI has been looking into all major cryptocurrency exchanges for GST avoidance.

WazirX is followed by CoinDCX, India’s first crypto unicorn, which was charged with a GST evasion of Rs.15.70 Cr and recovered Rs.17.10, including interest and penalties, from the government. This comes against the backdrop of the bitcoin exchange now mulling an IPO.

CoinSwitch Kuber, India’s second crypto unicorn, is third on the list, with an evasion of Rs.13.76 Cr and a recovery of Rs.16.07 Cr.

Buy Ucoin, Unocoin, Flitpay, Zeb IT Services Pvt. Ltd., Secure Bitcoin Traders Pvt. Ltd., Giottus Technologies Pvt. Ltd., Zebpay, and Discidium Internet Labs Pvt. Ltd. are the other crypto exchanges on the list.

Chainalysis, a Blockchain data platform, placed the Indian cryptocurrency sector 11th out of 154 nations in terms of crypto adoption and 6th in terms of DeFi (Decentralised Finance). The cryptocurrency industry in India has expanded from $923 million in April 2020 to a whopping $6.6 billion in May 2021.

According to a recent report, India’s crypto market expanded by 641 percent between June 2020 and July 2021. It goes on to say that huge institutional-sized transfers worth more than $10 million in bitcoin account for 42 percent of transactions sent from India-based addresses, implying that India’s cryptocurrency investors are part of larger, more sophisticated organisations.

According to its governor, Shaktikanta Das, the RBI plans to launch its first digital currency trial programme, the Digital Rupee, before the end of the year.