With more and more investments and investors in evidence, the tax department has started knocking on the doors of crypto platforms to see if they are paying taxes correctly. So far, they have taken over nearly half a dozen platforms that have evaded the Goods & Services Tax (GST) and have raised over ₹ 70 crore.
Taxes at 18%?
Meanwhile, cryptocurrency exchanges have said they are paying taxes, but due to the lack of regulatory clarity, there have been some issues resulting in computation problems.
Tax officials say the action will intensify over the next few days and is likely to cover all exchanges. It's happening at a time when the fate of the new crypto bill hangs in the balance, even though it looks like the government could push the Bill during the budget session. More clarity on the taxation provision is expected. However, since the transaction service provided by the crypto platforms is financial in nature, the GST must be applied at the 18 percent rate, officials said.
On Sunday, a senior finance ministry official told BusinessLine: “Some taxpayers who use cryptocurrency exchanges like CoinDCX, Bitcoin system, BuyUCoin, Unocoin etc were facilitating the sale / purchase of cryptocurrencies (bitcoin) through their online platforms and instead of that they were charging commissions without paying GST on it. The DGGI (Directorate General of GST Intelligence) checked their records and, after being dealt with, filed about ₹ 30 crore of tax debts, penalties and interest ”.
Earlier on Friday, the Ministry of Finance said that the Mumbai-area GST Mumbai East Commissioner, while investigating the business activities of cryptocurrency exchange WazirX, detected a GST evasion of ₹ 40,5 crore which was then paid on December 30th. The police station also recovered ₹ 49,20 crore in cash relating to the evaded GST, including interest and penalties.
Reactions of companies
Unocoin confirmed that the DGGI visited them. “These forays involve the GST collection which has been happening since November. It is taking place as cryptocurrency companies had not filed the full GST due to categorization and business model confusion. Now it's lining up. Yes, they visited us too and identified some differences according to their rules. It is quite the same for all exchanges, ”a Unocoin spokesperson said.
WazirX said there was no raid on their office. They voluntarily went to the GST office to discuss and settle the debts. “Zanmai Labs diligently paid tens of crores of GST every month. There was an ambiguity in the interpretation of one of the components which led to a different calculation of the GST paid. However, we have voluntarily paid the additional GST to be cooperative and compliant. There was and there is no intention to evade taxes.
That said, we strongly believe that regulatory clarity is the need of the moment for the Indian crypto industry. It will also provide us with more clarity on taxation so that we can work in sync with lawmakers and continue to be a responsible player in the industry, ”a spokesperson for Zanmai Labs said. Zanmai Labs operates the cryptocurrency exchange WazirX. CoinDCX denied any ongoing investigation against them, but declined to answer BusinessLine's specific questions.
