Binance has received a show-cause letter from the Directorate General of GST Intelligence (DGGI) of Ahmedabad to pay INR 722 crores, approximately $86 million USD, as goods and services tax (GST).

The DGGI, operating under India’s Ministry of Finance, alleges that Binance is liable to pay GST as it had collected fees from Indian nationals using its platform. Binance also reportedly failed to register under the GST framework, resulting in the recent scrutiny.

The GST is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services at the national level. Foreign entities operating in India are required to pay this tax if they offer their services to Indians and register under the GST framework.

Binance allegedly earned at least INR 4,000 crores, approximately $476 million, from transaction fees. Investigations conducted by the DGGI revealed that the fees were deposited in an account controlled by Nest Services Limited, a Seychelles-based Binance subsidiary.

Additionally, the DGGI has reached out to other companies in the Binance group, including those operating in the Cayman Islands and Switzerland. In response, Binance has reportedly appointed a representative to engage with the agency to resolve the issue.

For the DGGI, this was the first instance where it issued a show-cause of this nature to a cryptocurrency firm. However, the agency has previously taken action against domestic cryptocurrency exchanges to thwart tax evasion.

During a 2022 investigation, the DGGI found that several crypto exchanges were responsible for INR 70 crores, approximately $8.34 million, in tax evasion.

Meanwhile, Binance is facing another significant payment to Indian regulators. In June, the nation’s Financial Intelligence Unit imposed a $2.25 million fine on the exchange for failing to register its operations. Despite the fine, sources claimed that Binance was considering returning to India as a compliant platform and was willing to pay the fine.

Binance was banned in January but had largely dominated the Indian market prior to that. When India implemented a 30% capital gains tax and a 1% TDS on crypto profits and trades, investors rushed to the platform to avoid the added costs.

Binance had initially entered the Indian market by acquiring the local crypto exchange WazirX. However, it later distanced itself, claiming the acquisition was not completed, right after India’s Enforcement Directorate (ED) initiated a money laundering investigation against WazirX.

For more updates and detailed news on the cryptocurrency landscape, explore Global Crypto News.

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