Binance Sought $86 Million in Taxes by India

India's tax authorities have accused Binance of failing to pay its required taxes for the period from July 2017 to March 2024.

According to local media outlet Times of India, cryptocurrency exchange Binance is being sought $86 million in back taxes from the Directorate General of Goods and Services Intelligence (DGGI), an agency responsible for tax compliance and "anti-tax evasion" of businesses, operating under the purview of the Indian Ministry of Finance.

DGGI has accused Binance of collecting more than $476 million in transaction fees from Indian customers on its platform between July 2017 and March 2024. The entire amount was transferred to a Seychelles-based Binance Group company - Nest Services Limited - but has not yet paid its tax obligations to the regulator.

However, in the latest development, Binance has taken note of the information and appointed a local advisory team in India to liaise with DGGI to address the tax compliance issue in the country.

Binance has challenged a nearly $86 million tax penalty notice issued by India’s tax department DGGI for fees collected from Indian customers between July 2017 and March 2024. DGGI is an agency responsible for indirect tax evasion intelligence and is part of the Indian Ministry…

— Wu Blockchain (@WuBlockchain) August 6, 2024

Indian law requires all crypto service providers and investors to pay a withholding tax (TDS) of 1% on every crypto transaction regardless of value. Additionally, all profits earned through crypto investments are subject to a 30% tax - which has been implemented by the Chairman of the Central Board of Taxation from April 1, 2022.

After the 30% tax law was enacted, Indian crypto exchanges like WazirX and CoinDCX, implemented internal systems to simplify tax obligations for their users. However, foreign exchanges like Binance were not included in the list of those who were subject to the law at the time.

The DGGI has also been collecting taxes from Indian crypto exchanges on several occasions, but this is the first time the agency has taken action against an international crypto exchange. The Indian government is expected to impose similar taxes on all other foreign crypto exchanges, including Huobi, Kraken, Gate.io, KuCoin, Bitstamp, MEXC Global, Bittrex, and Bitfinex.

Binance is currently settling a $2.25 million fine with India’s Financial Intelligence Unit (FIU) for violating anti-money laundering laws in an effort to restore its crypto services in the country following the December 2023 ban. The fine is higher than Binance’s initial estimate, compared to the $41,000 fine the FIU imposed on KuCoin.

An Economic Times report said that Indian investors account for around 90% of Binance’s crypto trading volume, estimated at $4 billion. Binance’s market dominance could be due to its non-compliance with local government tax laws, which allows users to trade cryptocurrencies without paying the 1% TDS.