DGGI raids on crypto exchanges: The Directorate General of GST Intelligence, or DGGI, has since last week launched a crackdown campaign on cryptocurrency exchanges in the country. This is because cryptocurrency exchanges have apparently evaded goods and services tax (GST) worth crores, the central organization has told the media. This comes days after DGGI cracked down on WazirX, a leading cryptocurrency exchange firm in India. Crypto firms have been placed under scrutiny at a time when India is in the process of creating a legal framework to govern the operation of digital tokens in the country.
“Around half a dozen offices of cryptocurrency service providers have been searched and large-scale Goods and Services Tax (GST) evasion by DGGI has been detected,” new agency ANI quoted sources as saying.
Cryptocurrency wallets or exchange platforms are websites where customers and traders can trade crypto coins such as Bitcoin, Ethereum, Dogecoin and others. Some of the platforms that have been raided on January 1 include Coinswitch Kuber, CoinDCX and Bitcifer Labs, reported ANI.
“DGGI is investigating Coinswitch Kuber by M/s Bitsifer Labs LLP, CoinDCX by M/s Neblio Technologies Pvt. Ltd., BuyUCoin by M/SI Block Technologies Pvt. Ltd. and Unocoin by M/s Unocoin Technologies Pvt. Ltd.,” the news agency said in its report. The report quoted sources as saying.
The media house further said that Mumbai CGST and DGGI have detected theft of Rs 70 crore during their individual raids. A top source told ANI that crypto service providers paid Rs 30 crore and Rs 40 crore as GST, interest and penalty for non-compliance with the statutory provisions of the GST law.
“They are providing facilitation intermediary services for the purchase and sale of crypto coins. These services attract a GST rate of 18 per cent, which all of them have been avoiding.”
On Thursday, December 30, the CGST department in Mumbai region notified that it has recovered Rs 49.2 crore in cash from WazirX as GST, interest and penalty.
“GST evasion of Rs 40.5 crore has been detected by the officials of CGST Mumbai East Committee. On commission of Vazir X crypto currency and recovered Rs 49.2 crores. In Cash as GST, Interest and Penalty today 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 WRX Coin, but has not paid GST on it. He claimed that the platform had launched the coins through Zamanai Labs Pvt Ltd. According to a report in Economic Times, the indirect tax department said that they attract 18 per cent GST on launching a new crypto coin.
When contacted, Zanmai Labs, which controls WazirX’s operations in India, said there was an ambiguity in the interpretation of one of the components, resulting in a different calculation of GST. “Zanmai Labs Pvt. Ltd. is diligently paying GST worth tens of crores every month. There was ambiguity in the explanation of one component which led to a separate calculation of GST paid. However, in order to be cooperative and compliant, we have Voluntarily paid additional GST. There was and was no intention to evade tax, a spokesperson for 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. This will give us more clarity on taxation so that we can keep pace with lawmakers, and remain a responsible industry player.” ,” the spokesperson, who opted to remain anonymous, continued.
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