IN DEPTH: Indian tax officials collected more than Rs 84 crore, or $11 million U.S., in back taxes and penalties from crypto exchanges last year after a months-long investigation stemming from discrepancies in exchanges' tax records. amitoj reports
India's goods and services tax was implemented in 2017. This same tax regime would later lead to five crypto exchanges paying over $11 million in back taxes and penalties. Tax agencies have several other crypto exchanges on their radar but expect these “inspections” to serve as a deterrent that will make the industry voluntarily fall in line.
A tax official flagged a mismatch between revenue earned, transactions made and tax paid by several crypto exchanges in India this past August., tax agencies would collect over Rs 84 crore from less than half a dozen crypto exchanges in back taxes and fees. As the DGGI, which is a national law enforcement agency, began scrutinizing the tax returns of crypto exchanges, a similar, but independent operation had begun in India’s financial capital, Mumbai.
CoinDesk spoke to multiple sources with direct knowledge of the matter to determine the sequence of events.The tax agencies insisted that they conducted “inspections” and after scrutinizing the limited documents and third-party sourced information they felt the need to check the books . India’s goods and services tax code was introduced in 2017 and had a tumultuous and controversial path. GST is an indirect tax that service providers, retailers and consumers must pay.
On Sept. 22, the same tax officials reached Mumbai to inspect CoinDCX, which is owned by M/s Neblio Technologies PVT. LTD. By Oct. 7, the tax officials had reached the office of CoinSwitch Kuber, owned by M/s Bitcipher Labs LLP, in India’s IT hub, Bengaluru. CoinSwitch Kuber had 1 million Indian users at the start of 2021 but ended the year with 14 million and a 3,500% rise in transaction volume.“They were paying taxes on Indian transactions. However, they were also entertaining transactions by foreigners thinking it is export of services which is not taxable.
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