Money & Banking

Taxmen may come knocking on the doors of more crypto exchanges

Shishir Sinha |Debangana Ghosh | | | Updated on: Jan 02, 2022

FILE PHOTO: Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic/Illustration/File Photo | Photo Credit: Dado Ruvic

Exchanges claim paying taxes on regular basis, press for more regulatory clarity

With more number of investments and investors being highlighted, the tax department has started knocking the doors of crypto platforms to see if they are paying taxes properly. As of now, they have detected nearly half dozen have evaded Goods & Services Tax (GST) and have collected over ₹70 crore.

Meanwhile, crypto exchanges said they are paying taxes but due to lack of regulatory clarity, there have been some issues resulting in calculation issues.

Tax officials say that action will intensify in coming days and is likely to cover all exchanges. It is happening at a time when the fate of new crypto Bill hangs in balance, though it seems the government might push the Bill during the Budget session. It is expected to prescribe more clarity on the taxation provision. However, since the transaction service provided by crypto platforms is financial in nature, GST needs to be applied at the rate of 18 per cent, officials said.

On Sunday, a senior Finance Ministry official told BusinessLine : “Some taxpayers running crypto exchanges such as CoinDCX, BuyUCoin, Unocoin etc were facilitating sale/purchase of crypto currency (bitcoins) through their online platforms and in lieu thereof were charging commissions without paying GST on it. The DGGI (Directorate General of GST Intelligence) checked their records and on being confronted, deposited about ₹30 crore of tax dues, penalty and interest.”

Earlier on Friday, Finance Ministry said that the GST Mumbai East Commissionerate of Mumbai Zone, while investigating the business activities of cryptocurrency exchange WazirX, detected GST Evasion of ₹40.5 crore which was then paid on December 30. The Commissionerate has also recovered ₹49.20 crore in cash pertaining to GST evaded, including interest and penalty.

“The CGST department will cover all the cryptocurrency exchanges falling in Mumbai zone and will also intensify this drive in the coming days,” the Ministry said.

Firms’ reactions

Unocoin confirmed that DGGI had visited them. "These raids are all about GST collection that is happening since November. It is taking place as the crypto companies had not filed full GST due to categorisation and business model confusion. It is getting aligned now. Yes, they visited us as well and have identified some differences as per their rule book. It is quite same with all exchanges," said a Unocoin spokesperson.

WazirX said there was no raid at their office. They voluntarily went to the GST office to discuss and settle the dues. "Zanmai Labs has been diligently paying tens of crores worth of GST every month. There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid. However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax. That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry. It will also provide us with more clarity on taxation so that we can work in sync with the lawmakers, and continue to be a responsible industry player," said a Zanmai Labs spokesperson. Zanmai Labs manages cryptocurrency exchange WazirX.

CoinDCX has denied any investigation happening against them but declined to respond to specific queries by BusinessLine.

Published on January 02, 2022
COMMENTS
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you