Online

The Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) has&nbsp;<a style="text-decoration:none" href="https://timesofindia.indiatimes.com/technology/tech-news/binance-the-worlds-largest-crypto-exchange-gets-rs-722-crore-gst-from-dggi/articleshow/112304561.cms">issued</a> a show-cause notice to Binance, the world’s largest cryptocurrency exchange, demanding a Goods and Services Tax (GST) payment of Rs 722 crore, equivalent to $86 million.&nbsp;
This marks the first time the DGGI has taken such action against a cryptocurrency firm, setting a significant precedent in India's efforts to regulate the rapidly growing virtual currency market.
&nbsp;
However, Binance has challenged the showcause notice, according to a recent&nbsp;CoinDesk report.&nbsp;
<h2 dir="ltr" id="span-span-allegations-and-non-compliance-span-span">Allegations and Non-Compliance</h2>
The tax recovery notice alleges that Binance collected fees from Indian customers trading in virtual digital assets (VDAs) on their platform without registering under the Indian GST framework. This move follows a broader regulatory push in India to ensure that all financial activities, including those involving digital currencies, comply with national tax laws.
&nbsp;
In June 2024, Binance&nbsp;<a style="text-decoration:none" href="https://bsc.news/post/binance-prepares-for-return-to-india-after-paying-2-m-fine">faced</a> a fine of approximately $2.2 million for providing services to Indian clients without adhering to the nation's anti-money laundering rules.&nbsp;
&nbsp;
However, this process also saw Binance receiving approval from India's Financial Intelligence Unit (FIU) as a registered entity. In its bid to resume operations, Binance committed to full compliance with the Prevention of Money Laundering Act (PMLA) and the VDA taxation framework.
<h2 dir="ltr" id="span-span-efforts-to-comply-and-ongoing-issues-span-span">Efforts to Comply and Ongoing Issues</h2>
Despite these commitments, Binance has previously been criticized for a casual approach to Indian regulations, leading to significant tax leakage and its initial ban.
&nbsp;
Reports indicate that Binance's non-compliance with the 1% tax deducted at source (TDS) on registered exchanges gave it an undue advantage over competitors. The current investigation by the DGGI, independent from the FIU, focuses on the platform's failure to adhere to GST registration requirements.
<h2 dir="ltr" id="span-span-oidar-classification-and-financial-implications-span-span">OIDAR Classification and Financial Implications</h2>
The DGGI's notice categorizes the services provided by Binance as Online Information and Database Access or Retrieval Services (OIDAR). OIDAR services are delivered via the internet and received by the recipient online, without any physical interface with the supplier.&nbsp;
&nbsp;
According to reports, Binance earned more than $476 million (approximately Rs 4,000 crore) in transaction fees, transferred to a Binance Group Company, Nest Services Limited, based in Seychelles.

Binance Hit with $86M Tax Demand by Indian Authorities Over GST Registration

Table of Contents

BSCN

Other articles published on Aug 9, 2024

Bitcoin Miners Experience Revenue Drop

Solana developers address critical vulnerability with coordinated patch

DTX Exchange (DTX) Stuns With $1M Giveaway While Toncoin and Ondo See Major Listings

July 2024 Public Chain Report: Navigating Market Fluctuations and Ethereum ETPs Impact

Trump Jr: New DeFi Project Will Disrupt Banking

Applying blockchain to good causes is a must | Opinion

Join our free newsletter for daily crypto updates!