DGGI Raids on Crypto Exchanges: The Directorate General of GST Intelligence, or DGGI, has launched a crackdown drive on cryptocurrency exchanges in the country since last week. This is because the cryptocurrency exchanges have apparently evaded Goods and Service Tax (GST) worth crores, the central organisation has told the media. This came days after the DGGI had cracked down WazirX, a leading cryptocurrency exchange firm in India. The crypto firms have been put under scanner at a time when India is under the process to prepare a legal framework to regulate how the digital tokens carry out operations in the country.
“Around half dozen offices of Cryptocurrency Service providers have been searched and massive Goods and Service Tax (GST) evasion has been detected by DGGI," new agency ANI reported quoting sources.
Cryptocurrency wallets or exchange platforms are websites though which customers and merchants can carry out trading of crypto coins like Bitcoin, Ethereum, Dogecoin and others. Some of the platforms that have been raided on January 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/S I Block Technologies Pvt. LTD. and Unocoin by M/s Unocoin Technologies Pvt. LTD," the news agency said in its report quoting sources.
The media house further said that the Mumbai CGST and DGGI during their individual raids have detected evasions worth Rs 70 crore. A top source told ANI that the crypto service providers paid Rs 30 crore and Rs 40 crore as GST, interest and penalty for non-compliance to the statutory provisions of GST law.
“They are providing facilitation intermediary services for buying and selling of crypto coins. These services attract GST rate of duty of 18 per cent which all of them have been evading," said official sources, according to the report.
On Thursday, December 30, the CGST department in the Mumbai Zone notified that it had recovered Rs 49.2 crore in cash as GST, interest and penalty from WazirX.
“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,’ CGST Mumbai Zone said in a tweet on December 30.
The CGST Department said that WazirX has launched its own cryptocurrency called the WRX Coin but did not pay 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 crypto coin attracts an 18 per cent GST on them, according to a report by the Economic Times.
When contacted, Zanmai Labs, which controls operations of WazirX in India, said that there was an ambiguity in interpretation of one of the components, which resulted in a different calculation of GST. “Zanmai Labs Pvt. Ltd. has been diligently paying tens of crores worth of GST every month. There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid. However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax," a spokesperson of Zanmai Labs told News18.com.
“That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry. It will also provide us with more clarity on taxation so that we can work in sync with the lawmakers, and continue to be a responsible industry player," the spokesperson, who chose to remain anonymous, said further.