Binance-owned exchange WazirX targeted by India's government for alleged tax evasion

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Tax authorities in Mumbai announced Friday that they had uncovered tax evasion by the Binance-owned crypto exchange WazirX.

According to a statement from the GST Mumbai East Commissionerate of Mumbai Zone, "while investigating the business activities of cryptocurrency exchange WazirX have detected GST Evasion of Rs 40.5 Crores. The Commissionerate has also recovered Rs 49.20 Crores in Cash pertaining to [goods-and-services tax] evaded, interest and penalty." 

That amount equates to more than $6 million. WazirX was acquired by crypto exchange Binance in November 2019. 

In its Friday statement, the commissionerate indicated that it was investigating other crypto exchanges as well. 

"The above case is a part of the special anti-tax evasion drive, which relies on intensive data mining and data analytics, initiated by the CGST Mumbai Zone," the commissionerate said, adding:

"The officers of CGST Mumbai zone are investigating business transactions related to emerging economic space like e-commerce, online gaming, Non-Fungible Tokens to identify the areas of possible tax evasion. The CGST department will cover all the cryptocurrency exchanges falling in Mumbai zone and will also intensify this drive in the coming days."

The moves are notable, given the broader backdrop of the still-unsettled regulatory framework for crypto in India today. According to a report from The Economic Times, other exchanges have been subject to search and investigation in light of the WazirX investigation.

Per the report, the Directorate General of GST Intelligence -- a law enforcement agency under the Ministry of Finance -- is also involved in the investigations. 

Among the exchanges named in the report are CoinDCX, Unocoin, Coinswitch Kuber and BuyUCoin, per the Times report. Per CoinDesk, the searches took place on Saturday.

CoinDesk reported that, according to WazirX: "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."

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May 5, 2022, 3:17PM UTC
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