Indian crypto exchange WazirX has reportedly paid more than $ 6.6 million (Rs 49.2 crore) as a result of the non-payment of the Goods and Services Tax (GST) on trade commissions. The total recovery includes the outstanding tax of $ 5.43 million (Rs 40.5 crore), interest and a penalty for non-payment.
Government officials from the Central GST and Excise Committee (CGST Mumbai area) recovered the funds from the crypto exchange after detecting a GST breakout of $ 5.43 million on commissions. A typical GST fraud involves creating false invoices without actually moving the goods between the seller and the buyer.
CGST Mumbai East committee agents detected a GST breakout of Rs 40.5 Cr. on commission from Wazir X Crypto Currency & recovered Rs 49.2 Cr. in cash in the form of GST, interest and penalties today 12/30/2021 from Zanmai Labs Pvt. Ltd. @nsitharamanoffc @mppchaudhary @cbic_inde @PIBMumbai
– Mumbai CGST Zone (@cgstmumbaizone) December 30, 2021
According to local media outlet Economic Times, the tax department detected that WazirX was using its internal WRX tokens for commissions, which were distributed by Zanmai Labs. Further investigation revealed that the crypto exchange did not pay an 18% tax on the total tokens issued based on its market price.
Investigators revealed that WazirX paid GST on the 0.2% commission it charges users for transacting with the local currency i.e.Rupiah, stating:
“But in cases where the trader opts for a transaction in WRX coins, the commission charged is 0.1% of the trading volume and he was not paying GST on that commission.”
It is also important to note that the WazirX and WRX tokens are owned by Binance, the world’s largest crypto exchange in terms of transaction volume. According to a spokesperson for Zanmai Labs, the non-payment of the tax was linked to a misinterpretation of the GST rules:
“We voluntarily paid extra GST in order to be cooperative and compliant. There was and is no intention to evade tax.
WazirX CEO Nischal Shetty previously explained to Cointelegraph the importance of regulatory clarity for retail adoption. He also warned that overnight regulation could hurt the progress of the crypto ecosystem and leave loopholes open for bad players:
“There is a $ 2.5 trillion market out there, and it won’t wait for a country to join us. I tweeted ‘#IndiaWantsCrypto’ for over 1000 days for the sole purpose of having crypto regulation in India.
What an important step for Indian Crypto!
With #IndiaWantsCrypto my mission was:
– Bring positive crypto regulation to India
– Disseminate the right information about Crypto
Thousands of people joined this campaign
Let’s continue our mission
Jai Hind #IndiaWantsCrypto
– Nischal (WazirX) ⚡️ (@NischalShetty) July 28, 2021
Although the concept of the GST is relatively new to the region, the Indian government has already agreed to show leniency towards defaulters and fraudsters – usually settling such cases with a monetary penalty and a lower likelihood of imprisonment. .
WazirX has not yet responded to Cointelegraph’s request for comment.
Related: Indian Trading Group Recommends ‘Special Class Security’ Status For Crypto
In an attempt to help the Indian government decide on crypto laws, the Confederation of Indian Industries (CII) has proposed to treat cryptocurrencies as securities of a special class.
A report released by the non-governmental trade association showed that the CII is proposing to formulate new regulations around the nascent crypto market instead of regulating them under existing securities law.
As Cointelegraph reported, CII recommended a special provision in income tax and GST laws, which will treat cryptocurrencies as an asset class for tax purposes, unless they are not. are specifically treated as “stock market shares” by a participant.