DGGI raids on crypto exchanges: The Directorate General of GST Intelligence, or DGGI, has been cracking down on cryptocurrency exchanges in the country since last week. This is because the cryptocurrency exchanges have apparently evaded the Goods and Service Tax (GST) worth crores, the central organization has told the media. This came days after the DGGI cracked WazirX, a leading cryptocurrency exchange company in India. The crypto companies have been placed under a scanner at a time when India is preparing a legal framework to regulate how the digital tokens conduct operations in the country.
“About half a dozen offices of Cryptocurrency Service providers have been searched and mass goods and service tax (GST) evasion has been detected by DGGI,” the new agency reported, ANI, citing sources.
Cryptocurrency wallets or exchange platforms are websites that allow customers and merchants to trade cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, and others. Some of the platforms that were raided on Jan. 1 include CoinSwitch Kuber, CoinDCX and Bitcipher Labs, ANI reported.
“The DGGI is investigating Coinswitch Kuber by M/s Bitcipher Labs LLP, CoinDCX by M/s Neblio Technologies PVT. LTD., BuyUCoin by M/SI Block Technologies Pvt. LTD. and Unocoin by M/s Unocoin Technologies Pvt. LTD,” the news agency said in its report citing sources.
The media house further said that the Mumbai CGST and DGGI discovered evasions worth Rs 70 crore during their individual raids. A top source told ANI that the crypto service providers paid Rs 30 crore and Rs 40 crore as GST, interest and penalty for failing to comply with the legal provisions of the GST Act.
“They provide brokerage services for buying and selling cryptocurrencies. These services attract an 18 percent VAT rate, which they have all evaded,” official sources said, according to the report.
On Thursday, December 30, the CGST branch in the Mumbai zone reported that it had recovered Rs 49.2 crore in cash as GST, interest and fine from WazirX.
Officers of CGST Mumbai East Comm’te have detected GST evasion of Rs 40.5 Cr. on behalf of Wazir X Crypto Currency & recovered Rs 49.2 Cr. in cash as GST, interest and fine today on 30.12.2021 from Zanmai Labs Pvt. Ltd,” CGST Mumbai Zone said in a tweet on Dec. 30.
The CGST department said that WazirX has launched its own cryptocurrency, the WRX Coin, but has not paid GST on it. The platform, they claimed, had launched the coins through Zamnai Labs Private Limited. The indirect tax department said that launching a new cryptocurrency will yield 18 percent GST, according to a report by the Economic Times.
When contacted Zanmai Labs, which manages WazirX’s operations in India, he said there was an ambiguity in the interpretation of one of the components, resulting in a different calculation of GST. “Zanmai Labs Pvt. Ltd. has diligently paid tens of crores to GST every month. There was an ambiguity in the interpretation of one of the components leading to a different calculation of the GST paid. However, we have voluntarily paid additional GST to be cooperative and compliant. It was not and is not intended to be tax evasion,” a Zanmai Labs spokesperson told News18.com.
“Having said that, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry. It will also give us greater clarity on taxes so that we can work in sync with lawmakers and remain a responsible player in the industry,” the spokesperson, who chose to remain anonymous, said.
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