Indian crypto exchange WazirX reportedly paid more than $ 6.6 million (49.2 crore rupees) after non-payment of the Goods and Services Tax (GST, for its acronym in English) on commercial commissions. Total recovery includes pending tax of $ 5.43 million (40.5 million rupees), interest and a penalty for non-payment.
Officials from the GST and Central Tax Commission (Mumbai-area CGST) recovered funds from the cryptocurrency exchange after detecting a GST evasion of $ 5.43 million in fees. A typical GST fraud involves creating false invoices without actually moving the merchandise between the seller and the buyer..
Officers of CGST Mumbai East comm’te have detected GST Evasion of Rs 40.5 Cr. On commission of Wazir X Crypto Currency & recovered Rs 49.2 Cr. In cash as GST, interest & Penalty today on 30.12.2021 from Zanmai Labs Pvt. Ltd. @nsitharamanoffc @mppchaudhary @cbic_india @PIBMumbai
– CGST Mumbai Zone (@cgstmumbaizone) December 30, 2021
CGST Mumbai East comm’te officials have detected GST evasion of Rs 40.5 Cr. For Wazir X Crypto Currency fees and recovered Rs 49.2 crores in cash for GST payment, interest and penalty today, December 30, 2021 Zanmai Labs Pvt. Ltd.
According to the local Economic Times, the tax department found that WazirX uses its internal WRX tokens for commissions, which were distributed by Zanmai Labs. Further investigation revealed that the cryptocurrency exchange stopped paying 18% taxes on the total tokens issued based on their market price.
The researchers revealed that WazirX paid the GST on the 0.2% commission it charges users for trading in the local currency, that is, the rupee, clarifying that:
“But in the cases in which the trader opts for the transaction in WRX currencies, the commission charged is 0.1% of the volume of operations and they were not paying the GST on this commission.”
It is also important to note that WazirX and WRX tokens are owned by Binance, the world’s largest cryptocurrency exchange in terms of trading volume. Speaking to Cointelegraph, a Zanmai Labs spokesperson said that non-payment of taxes was related to misinterpretation of GST rules:
“We voluntarily paid the additional GST in order to be cooperative and compliant. There was and is no intention to evade taxes.”
WazirX CEO Nischal Shetty previously spoke to Cointelegraph about the Importance of Regulatory Clarity for Retailer Adoption. He also warned that an overnight regulation can hurt the progress of the cryptocurrency ecosystem and leave loopholes open for bad actors:
“There is a 2.5 trillion dollar market out there, and it is not going to wait for any nation to decide to join. I have been tweeting ‘#IndiaWantsCrypto’ for over 1,000 days with the sole aim of having crypto regulation in India. “.
Day 1000
What a milestone for Indian Crypto!
With #IndiaWantsCrypto my mission has been:
– Bring positive crypto regulation in India
– Spread right information about CryptoLakhs of people have joined this campaign
Let’s continue our mission
Jai hind #IndiaWantsCrypto
– Nischal (WazirX) ⚡️ (@NischalShetty) July 28, 2021
Day 1000
What an achievement for cryptocurrency in india!
With #IndiaWantsCrypto my mission has been:
– Bringing positive regulation for cryptocurrencies in India
– Spread the right information about cryptocurrenciesThousands of people have joined this campaign
Let’s continue our mission
Jai Hind #IndiaWantsCrypto
Yes OK the concept of GST is fairly new to the region, the government of India has previously agreed to show leniency towards defaulters and fraudsters: usually solving cases with a monetary penalty and a lower probability of jail time. The Zanmai Labs spokesperson concluded:
“We firmly believe that the regulations will provide us with more clarity on taxation so that we can work in concert with legislators and continue to be a responsible player in the sector.”
In an attempt to help the Indian government decide the laws for cryptocurrencies, the Confederation of Indian Industries (CII) proposed to treat cryptocurrencies as securities of a special class.
A report published by the non-governmental trade association showed that the IIC proposes to formulate new regulations around the nascent cryptocurrency market instead of regulating them under the existing securities law.
As Cointelegraph reported, the IIC recommended a special provision of the income tax and GST laws, which will treat cryptocurrencies as an asset class for tax purposes, unless specifically treated as “shares in trade” by a participant.
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