India Requires Binance to Pay $86 Million in Unpaid GST
In a significant development, Indian authorities have mandated cryptocurrency exchange Binance to settle nearly $86 million in unpaid goods and services tax (GST). This demand marks a pivotal moment as it represents the first instance of the Indian government imposing a tax obligation on a cryptocurrency exchange.
Just a month earlier, the Financial Intelligence Unit (FIU) of India had fined Binance 188.2 million rupees ($2.25 million) for breaching the country’s anti-money laundering regulations.
The Tax Framework for Cryptocurrency in India
The Directorate General of Goods and Services Tax Intelligence (DGGI) issued the demand on August 6, emphasizing the strict enforcement of tax regulations concerning cryptocurrency transactions in the country.
According to Indian law, all cryptocurrency service providers and investors must comply with a 1% tax deducted at source (TDS) on every cryptocurrency transaction, irrespective of the transaction’s value. Additionally, a 30% tax is imposed on all profits earned through cryptocurrency investments.
These regulations are designed to ensure proper tax compliance and prevent potential tax evasion within the burgeoning cryptocurrency market. While domestic cryptocurrency exchanges like WazirX and CoinDCX have implemented mechanisms to simplify tax obligations for users, offshore exchanges such as Binance have been slower in adhering to these requirements.
Binance’s Path to Resume Operations in India
Following the ban imposed on Binance and several other offshore cryptocurrency exchanges in January 2024 for non-compliance with local regulations, Binance has expressed its intention to recommence operations in India, contingent upon settling its tax liabilities.
The notification from DGGI underscores the government’s commitment to holding all market participants accountable, irrespective of their geographic location, thereby signaling a more stringent regulatory environment for cryptocurrency exchanges operating in India.
As Binance moves forward with plans to clear its dues and relaunch operations, this case sets a precedent for how India may address similar situations involving other offshore crypto platforms. The upcoming months will be critical for Binance as it navigates a complex regulatory landscape and strives to re-establish its presence in the Indian market.
