Binance is facing a demand for nearly $86 million in unpaid Goods and Services Tax (GST) from Indian authorities. This follows a previous ban on the crypto exchange in January 2024 for noncompliance with local regulations. In April, Binance expressed its intention to resume operations in India after addressing its pending taxes.
On August 6, the Directorate General of Goods and Service Tax Intelligence (DGGI) issued the demand. Detailed investigations revealed Binance earned substantial transaction fees from Indian customers, which were credited to a Seychelles-based Binance Group Company, Nest Services Limited. This marks the first tax demand by the Indian government on any crypto exchange.
Indian law mandates all crypto service providers and investors to pay a 1% Tax Deducted at Source (TDS) on every crypto transaction and a 30% tax on all profits from crypto investments. While Indian exchanges like WazirX and CoinDCX have implemented systems to simplify tax obligations for users, offshore exchanges, including Binance, failed to comply.
Initially, Binance planned to pay a $2 million fine for noncompliance to resume services. However, the $86 million fine aims to recoup the fees collected from Indian users. This move by Indian tax authorities is part of a broader effort to target offshore crypto exchanges operating without registering under India’s GST framework, which includes tax slabs of 5%, 12%, 18%, and 28%, with additional cess for certain services.
Binance’s plan to restart operations in India hinges on settling these tax liabilities, setting a precedent for how India may handle similar cases with other offshore crypto platforms. As Binance navigates this regulatory landscape, the outcome will be crucial for its reentry into the Indian market and for the broader cryptocurrency ecosystem in India.
