- India requires cryptocurrency exchange Binance to pay $86 million in unpaid goods and services tax.
- Indian law requires a 1% TDS on cryptocurrency transactions and a 30% tax on profits.
- Binance plans to resume operations in India after being banned in January 2024 due to violations.
In a major move, Indian authorities require cryptocurrency exchange Binance to pay nearly $86 million in unpaid goods and services tax (GST).
This marks a critical moment as this is the first time the Indian government has imposed a tax on any cryptocurrency exchange. Just a month ago, India’s financial regulator Financial Intelligence Unit (FIU) fined Binance 188.2 million rupees ($2.25 million) for violating India’s anti-money laundering (AML) regulations.
India’s Strict Cryptocurrency Tax Framework
The Directorate General of Goods and Services Tax Intelligence (DGGI) issued the request on August 6, emphasizing the country’s strict enforcement of tax regulations on cryptocurrency transactions.
Under Indian law, all cryptocurrency service providers and investors are required to pay 1% tax deducted at source (TDS) on every cryptocurrency transaction, regardless of its value.
Additionally, a 30% tax is levied on all profits generated from cryptocurrency investments. These regulations are intended to ensure proper tax compliance and curb potential tax evasion in the emerging cryptocurrency market.
Enforcement on Offshore Exchanges
While Indian cryptocurrency exchanges such as WazirX and CoinDCX have implemented internal mechanisms to simplify users’ tax obligations, offshore exchanges such as Binance lag behind in enforcing these requirements.
Recently, Binance, along with several other offshore cryptocurrency exchanges, faced a ban in India in January 2024 for not complying with local regulations.
However, Binance has expressed its intention to resume operations in the region, subject to resolving its tax liabilities.
Stricter Regulatory Environment
DGGI’s notification underscores the government’s commitment to holding all market participants accountable, regardless of their geographical location. This signals a stricter regulatory environment for cryptocurrency exchanges operating in India.
As Binance moves ahead with plans to restart operations after clearing dues, the case sets a precedent for how India handles similar situations for other offshore crypto platforms.
The coming months will be crucial for Binance as it navigates a complex regulatory landscape and works to regain its footing in the Indian market.
