Binance Faces $86M GST Bill from Indian Authorities

The Directorate General of GST Intelligence (DGGI) in Ahmedabad, India, has served Binance with a show-cause notice, requesting unpaid goods and services tax (GST) of INR 722 crores ($86 million USD). Allegations that Binance collected fees from Indian users without complying with the GST registration rules have prompted this move.

Binance has been charged by the DGGI, an Indian Ministry of Finance section that deals with tax fraud, of not registering under the GST system even though it offers services to Indian citizens. A broad-based indirect tax, the GST is levied nationally on the production, sale, and consumption of goods and services. International businesses that provide services in India are required to register in accordance with GST legislation.

Unpaid Taxes and Global Connections

According to a report from the Times of India, Binance reportedly earned around 4,000 crores ($476 million USD) from transaction fees in India. The DGGI’s investigation revealed that these fees were funneled into an account managed by Nest Services Limited, a Seychelles-based subsidiary of Binance. Additionally, the DGGI has reached out to other Binance-affiliated entities in the Cayman Islands and Switzerland, further complicating the situation for the crypto giant.

In response to the notice, Binance has appointed a representative to engage with the DGGI and address the allegations. This case marks the first time the DGGI has issued such a notice to a cryptocurrency company, although it has previously targeted domestic crypto exchanges for tax evasion.

During a 2022 investigation, the DGGI uncovered significant tax evasion among Indian cryptocurrency exchanges, amounting to approximately 70 crores ($8.34 million USD). Binance, having previously faced a $2.25 million fine from India’s Financial Intelligence Unit in June for failing to register its operations, is now staring at another hefty payment to Indian regulators.

Despite these difficulties, Binance seems to be thinking about coming back to the Indian market as a compliant platform, demonstrating a readiness to pay penalties and follow rules. Prior to a suspension in January, the exchange, which ruled the Indian market, observed a spike in the number of Indian users attempting to avoid new taxes on cryptocurrency trades and earnings.

Binance’s experience highlights the increasing complexity and difficulties that international cryptocurrency exchanges encounter in upholding compliance across many jurisdictions as it negotiates these legal and regulatory obstacles.