India’s Directorate General of GST Intelligence (DGGI) has reportedly issued a show cause notice to Binance. The regulator demands a Goods and Services Tax (GST) payment of INR 722 crore, roughly equivalent to $86.047 million.
This is the first time the DGGI has issued a show cause notice a major crypto firm, setting a significant precedent in the regulatory arena.
Why Indian Regulator Demands $86 Million From Binance
According to the Times of India, the notice concerns fees collected from Indian customers trading virtual digital assets (VDAs) on Binance’s platform. These transactions are categorized under online information database access or retrieval (OIDAR) services.
Despite Binance’s extensive global operations, spanning over 150 countries and holding at least 40% of the market share, it had not registered under the Indian GST framework. Consequently, this oversight has brought the crypto giant under close examination by Indian tax authorities.
“Binance reportedly earned at least INR 4,000 crore ( ~$476 million) from transaction fees charged to Indian customers. The company has a user base of 90 million users globally, including a substantial number of customers from India too. Detailed investigation revealed that the earnings of these fees were credited to the account of a Binance Group Company – Nest Services Limited – based in Seychelles,” a Times of India source said.
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Moreover, the DGGI’s Ahmedabad zonal unit has contacted Binance group companies in Seychelles, the Cayman Islands, and Switzerland. In response to these developments, Binance appointed a local counsel in India to address this substantial tax compliance issue.
Furthermore, earlier this year, Binance received approval from India’s Financial Intelligence Unit (FIU) to register as a virtual asset service provider (VASP). However, the company has to pay a fine of INR 18 crore (~$2.2 million) to the FIU for failing to comply with anti-money laundering (AML) regulations.
The FIU stressed that Binance must improve its compliance measures according to the Prevention of Money Laundering Act (PMLA). The Director of FIU-India, after a thorough review of the evidence and Binance’s submissions, confirmed the charges against the firm.
“We are aware of certain media reports circulating regarding tax notices being issued by Indian GST authorities to global crypto platforms. We would like to clarify that Binance is, and has always been, committed to adhering to relevant domestic legislations applicable to us. We are currently reviewing the details of the notice and are fully cooperating with the Indian tax authorities,” Binance spokesperson told BeInCrypto.
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This scrutiny of Binance is part of a global trend where crypto exchanges are increasingly held to strict regulatory standards. Similarly, in Nigeria, Binance was formally charged with tax evasion by the Nigerian Federal Government in March 2024. The Federal Inland Revenue Service (FIRS) of Nigeria accused Binance of evading Value-Added Tax (VAT) and Company Income Tax.
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