Indian government has cracked down around 17 cryptocurrency exchanges involved in a massive tax evasion fraud.
According to local media reports on December 10th, The Minister of State for Finance Pankaj Chaudhary said that the Indian government has discovered substantial Goods and Services Tax (GST) evasion by 17 cryptocurrency exchanges totaling ₹824.14 crore ($97.1 Million).
The tax evasion news comes against the backdrop of Indian crypto markets grappling with a extreme rise in scams, hacks and illicit activities.
Indian Government Pinpoints Crypto Exchanges Under Tax Evasion
This finding of these crypto exchanges is a component of a larger initiative to combat tax evasion in the cryptocurrency sector.
Nest Services Ltd., a member of the Binance Group, is one of the exchanges under investigation for allegedly evading ₹722.43 crore in GST.
Other platforms being investigated include CoinDCX with ₹16.84 crore, CoinSwitch Kuber with ₹14.13 crore, and WazirX operator Zanmai Labs Pvt Ltd with ₹40.51 crore in alleged evasion.
In India, Section 2(47A) of the Income Tax Act classifies cryptocurrencies as Virtual Digital Assets (VDAs). Cryptocurrency profits are subject to a flat 30% tax rate; the only deductions permitted are for acquisition costs. For transactions over ₹50,000 per year, a 1% Tax Deducted at Source (TDS) is also applied to improve transaction traceability
Indian Crypto Markets Struggle to Keep Operations Legal
India has witnessed an increase in illegal cryptocurrency-related activities in tandem with the country’s cryptocurrency boom.
India’s ED has been maintaining a close eye on the crypto industry in an effort to curb illegal activity. Just previously, the Enforcement Directorate of India arrested another suspects in cryptocurrency-related money laundering.
A money laundering investigation into a cyber fraud case worth Rs 640 crore ($76.7 million) led to the arrest of two chartered accountants and a cryptocurrency trader by the Enforcement Directorate (ED) on December 4th.
In another high profile case, notable Indian politician Sam Pitroda saw his devices like cell phone and laptop getting hacked and hackers had demanded the ransom in cryptocurrency.
The Enforcement Directorate also had seized additional assets in India and Dubai, worth about Rs 106 crore ($12 million), as part of its investigation into Chinese nationals involved in a cryptocurrency scam in the small state of Nagaland.
Over 603 crore rupees ($71.4 million) have been seized in this case so far. The defendants, many of whom were Indian nationals, used the “HPZ Token” to look for investments in addition to playing games and placing bets online.