Binance Leads the List of 17 Crypto Entities Investigated for Tax Evasion in India

Binance has emerged as the largest contributor to Goods and Services Tax (GST) evasion among cryptocurrency exchanges operating in India, according to a report from the Indian Finance Ministry.

In response to a parliamentary query regarding tax compliance in the cryptocurrency sector, Pankaj Chaudhary, the Minister of State for Finance, disclosed that a total of ₹824.14 crore (approximately $96 million) in GST had been evaded by 17 crypto entities under investigation. Binance’s subsidiary, Nest Services Limited, registered in Seychelles, accounted for the largest share of this evasion.

Binance’s Role in GST Evasion

Nest Services, a Binance Group company, was found to have evaded GST worth ₹722.43 crore (around $85 million). This figure made it the top GST evader in India among cryptocurrency exchanges. In comparison, WazirX, which is operated by Zanmai Labs Pvt. Ltd., was identified as the second largest evader, with ₹40.51 crore in GST evaded. WazirX had also suffered a major security breach in July, losing around $235 million in the hack.

GST Recovery Efforts

As part of the government’s efforts to recover the evaded taxes, a total of ₹122.29 crore has been retrieved from the entities under investigation, which includes penalties and interest payments. However, despite the significant sum evaded by Nest Services, no recovery has been made from the Binance-linked entity yet.

GST is a nationwide indirect tax in India, applicable to the production, sale, and consumption of goods and services. Foreign-based crypto platforms offering services in India are required to register and comply with the nation’s GST regulations. Binance's failure to meet these obligations led to the investigation and its eventual registration under the Financial Intelligence Unit (FIU) in August.

Binance's Response and Regulatory Compliance

Earlier this year, the Directorate General of GST Intelligence (DGGI) in Ahmedabad issued a show-cause notice to Nest Services after discovering that fees from Binance’s operations were being deposited into accounts controlled by the company. The DGGI estimated that Binance had earned over ₹4,000 crore (roughly $476 million) from transaction fees before being instructed to halt services and complete the necessary registration.

In response, Binance paid a $2.25 million fine and became a registered reporting entity under the Financial Intelligence Unit in August. The company has since appointed a representative to engage with Indian authorities to address the ongoing tax issues. Binance has also been cooperating with Indian law enforcement to combat illicit activities in the region.

Looking Ahead

As India continues to scrutinize the crypto sector’s tax practices, the investigation into Binance and other crypto exchanges highlights the growing need for transparency and compliance within the industry. While Binance has taken steps to align with Indian regulations, the country’s approach to crypto taxation and enforcement will likely set precedents for the broader crypto ecosystem.

This ongoing case serves as a reminder for cryptocurrency exchanges operating in India and globally to ensure they meet tax obligations and regulatory requirements to avoid potential legal and financial repercussions.