India’s Finance Ministry Reveals ₹824 Crore GST Evasion by Crypto Exchanges, Binance Group Company Tops the List
In a recent parliamentary session India’s Minister of State for Finance, Pankaj Chaudhary disclosed that cryptocurrency exchanges have collectively evaded Goods and Services Tax (GST) amounting to ₹824.14 crore (approximately $96 million). Among the 17 investigated entities, Nest Services Limited, a Seychelles-based Binance Group company emerged as the largest offender, contributing ₹722.43 crore (roughly $85 million) to the total tax evasion.
Binance Group and Other Major Offenders
Nest Services Limited, linked to Binance, accounted for nearly 88% of the identified GST evasion. Despite its substantial liability, the Indian government has yet to recover any dues from the company. Nest Services reportedly collected fees from Binance operations but failed to comply with GST requirements. The Directorate General of GST Intelligence (DGGI) issued a show-cause notice to the company in August, alleging unreported earnings of ₹4,000 crore (approximately $476 million) from transaction fees.
Binance has since made efforts to address these allegations. The exchange paid a $2.25 million fine in August for operating without proper registration and has now complied with Indian regulations by registering as a reporting entity under the Financial Intelligence Unit. Binance has also appointed a liaison representative to facilitate cooperation with Indian authorities and support investigations into illicit activities.
Following Nest Services, WazirX, operated by Zanmai Labs Pvt. Ltd., was the second-largest evader, with unpaid GST totaling ₹40.51 crore ($4.7 million). The platform faced additional challenges this year after a July hack that resulted in the loss of $235 million in user funds.
Recoveries and Broader Tax Compliance Challenges
The government has successfully recovered ₹122.29 crore ($14.3 million) from all investigated entities, including interest and penalties. However, the recovery process remains uneven, with no funds yet recovered from Nest Services, despite its significant share of the evasion.
India’s GST framework mandates that foreign entities providing goods or services in India must register and comply with tax obligations. Cryptocurrency exchanges classified as Virtual Digital Asset Service Providers, have been under increasing scrutiny with 47 such entities now registered as reporting entities under the Financial Intelligence Unit.
A Regulatory Wake-Up Call
This revelation marks another chapter in India’s effort to regulate the cryptocurrency industry and ensure compliance with tax laws. As the Indian government continues to ramp up its oversight of the crypto sector, it sends a clear message: evasion will not go unnoticed.
The crackdown on tax evasion by cryptocurrency exchanges highlights the growing pains of integrating digital assets into a robust regulatory framework. For now, exchanges like Binance are working to repair relations with Indian authorities while stepping up efforts to align with local laws.
Disclaimer:
This content is for informational purposes only and does not constitute financial, legal, or tax advice. Always consult a professional.
