After raid on WazirX, crypto exchanges under IT and ED scanners

[ad_1]

After detecting a significant amount of Goods and Services Tax (GST) evasion by the WazirX cryptocurrency exchange, other crypto exchanges and major digital currency investors are under the focus of several agencies, the Income Tax Department, the GST Intelligence Directorate (DGGI), and the Enforcement Directorate (ED), said two officials aware of developments.

Law enforcement is analyzing data relating to the business activities of cryptocurrency exchanges and investors in crypto assets, officials said on condition of anonymity.

“It’s a lame excuse that entities involved in GST or IT frauds are unaware of tax laws simply because cryptocurrency or virtual currency activities are unregulated. There is no ambiguity in law. Transactions of all goods and services incur GST and all income is taxable unless it is explicitly exempt, ”said one of the officials.

Clarifying the applicability of the cryptocurrency tax, Minister of Finance Nirmala Sitharaman told the Rajya Sabha on November 30, 2021: Income earned by crypto exchanges and other crypto service delivery platforms. Income earned from crypto exchanges and other platforms providing crypto services is taxable as part of business or profession under Chapter IV of the Income Tax Act 1961. The applicability of the tax will depend on the status and category of the taxpayer.

On March 23, then Minister of State for Finance (now Minister of Information and Broadcasting) Anurag Singh Thakur said in the Rajya Sabha: been exempt.

“After the recent detection of GST breaches by a cryptocurrency exchange, tax authorities and law enforcement agencies are aggressively pursuing several leads, including some cases of fraud. The appropriate agency will take appropriate action after these investigations are completed, ”the second person said.

Last month, the Mumbai GST authority detected a tax evasion of 40.5 crore through the WazirX cryptocurrency exchange. The authority also recovered 49.20 crore in cash relating to evaded GST, interest and penalties.

“During the investigation, it was found that the company [WazirX ] used to collect commission income in the form of trading fees, deposit fees and withdrawal fees. He paid GST only on commissions earned in rupees, but did not pay GST on commissions earned in WRX, ”a statement from the Ministry of Finance issued on Dec. 31 said. An 18% GST rate is applicable on these transaction fees, he added. According to the exchange’s website, just like Bitcoin and other cryptocurrencies, WRX is a token created by WazirX.

“The investigations into the WazirX case are not yet complete and the case is also under review by other agencies,” said the second person. Various such entities are under the control of the GST, tax authorities, and ED, which is already investigating more than half a dozen cases of cryptocurrency-related fraud.

While the Ministry of Finance, the Central Council of Direct Taxes (CBDT), the Central Council of Indirect Taxes and Customs (CBIC) and WazirX, did not respond to email questions on this matter; a spokesperson for the Internet and Mobile Association of India-Blockchain and Crypto Assets Council (IAMAI-BACC) said: “We would like to avoid commenting on the above development at this time.” IAMAI is an association of digital businesses in India and BACC is a Mumbai-based non-profit association under its umbrella. According to the BACC website, the association has more than two dozen members, including Bittron, CoinDCX, coinbase, Coinswitch Kuber, Koinbazar, Liminal, TRM, WazirX and zebpay.

[ad_2]