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Alleged tax evasion examines WazirX and other leading cryptocurrency exchanges in India

  • Indian tax authorities have targeted the Binance-owned WazirX exchange for alleged tax evasion of Rs 40.5 million (approximately $ 6 million).
  • A search was also initiated on four other exchanges in which authorities recovered Rs 30 million (approximately $ 4 million) in unpaid taxes.

India’s tax authorities are pursuing some of the country’s major crypto exchanges over alleged tax evasion. The operation began on Thursday, December 30, when a team of tax officials from the CGST (Central Goods & Services Tax and Excise) of the East Zone of Mumbai saw the evasion of 40.5 million rupees (400 million INR or about $ 6 million) in taxes from crypto exchange WazirX. The company, operated by Zanmai Labs Pvt Ltd, paid crore Rs 49.2, total taxes, accrued interest and penalties.

Dice a tweet from CGST Mumbai Zone:

CGST committee officials found Mumbai East evasion 40.5 Cr. GST on Wazir X cryptocurrency commission and earned 49.2 Cr. In cash as GST, interest and penalties today 12/30/2021 from Zanmai Labs Pvt. Ltd.

Alleged tax evasion puts WazirX in trouble

Tax authorities released a report on the same operation on 31 December. An excerpt states that «the case is part of the special campaign against tax evasion, which relies on data mining and rigorous data analysis, initiated by the CGST Zone in Mumbai.» The agency also warned that it will cover «all falling cryptocurrency exchanges in the Mumbai area and accelerate this unity in the coming days.»

WazirX, an exchange owned by Binance, alleged a lack of regulatory clarity on the part of the agency. Defending it, the firm says it is «diligently paying dozens of GST ales every month.» What’s more:

There was ambiguity as to the interpretation of one of the components that led to a different calculation of the GST paid. However, we paid the extra GST voluntarily to be cooperative and comply with regulations. There was no intention to evade taxes. That said, we strongly believe that regulatory clarity is a necessity of the moment for the Indian cryptocurrency industry.

Supplementary Notes

As the agency warned, additional registrations were made by four other cryptocurrency service providers on January 1st. The companies examined were CoinSwitch Kuber, CoinDCX, BuyUCoin and Unocoin, according to sources who had direct knowledge of the subject. The officials involved were Mumbai Finance officials, along with DGGI, a law enforcement agency under the Ministry of Finance responsible for combating tax evasion in India. More than 50 officers conducted the searches and the exchanges fully cooperated, according to the sources.

As a result, the DGGI recovered funds worth Rs 30 million (approximately $ 4 million), allegedly as part of the tax evasion scheme.

India, especially its central bank, was quite skeptical about cryptocurrencies, claiming to support financial crime. Cryptocurrency exchange operations have, to date, been guaranteed because the government is in favor of allowing cryptocurrencies rather than banning them. The new concern, however, is to stay away from tax evasion claims in light of the latest crackdown.

Jean Simmons

Jean Simmons has been a cryptocurrency enthusiast since 2014 and has been dedicated to the topic on a daily basis since she first learned about Bitcoin and blockchain technology. Besides cryptocurrency, Jean studied computer science and worked for two years at a blockchain startup. At Mercayala, he is responsible for technical issues. His goal is to bring cryptocurrencies to the world in a simple and understandable way.

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