Indian cryptocurrency exchange platform WazirX has come under the lens of the Goods and Service Tax, or GST, department which has said that it had evaded paying tax worth Rs 40.5 crore. The department said that it has initiated investigation against the platform under the circumstances. The CGST department in the Mumbai Zone also notified that it had recovered Rs 49.2 crore in cash as GST, interest and penalty. The news comes amid reports that the Centre is set to regulate cryptocurrency in India, which currently enjoys a free flow in the country. The Centre is supposed to do so by introducing a new Bill first.
“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.
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. @nsitharamanoffc @mppchaudhary @cbic_india @PIBMumbai— CGST Mumbai Zone (@cgstmumbaizone) December 30, 2021
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.
The tax department said that Zanmai Labs controls the cryptocurrency exchange operations for WazirX in India. Binance Investments, a Seychelles-based firm, owns both WazirX and its cryptocurrency WRX Coin, the department added.
This is the first time that a crypto trading platform has been scrutinised by the Indian government, amid talks of bringing in the new law regulating these digital tokens. Investigators who handled the case said that WazirX allows crypto trading and investing on its platform in two ways — through Indian rupees and the WRX Coins.
The officials, according to the report, found that the company was paying tax for transactions done through rupees, which attracts a 0.2 per cent commission from the users. "
“But in cases where the trader opts for transaction in WRX coins, the commission charged is 0.1 per cent of trading volume and they were not paying GST on this commission,” Economic Times quoted the tax department as saying.
When contacted, Zanmai Labs 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.
The Centre as well as the RBI has recently voiced apprehension about the ‘dangers’ of cryptocurrency, which apparently pose a threat and can potentially increase the number of frauds in the country. To curb these, the government will soon bring in a law to regulate how crypto exchange is done in India.