India’s cryptocurrency platforms lack clarity on tax provisions: Industry
Cryptocurrency platforms that are facing increased scrutiny from tax authorities for GST evasion are unclear about “applicable provisions” under the country’s indirect tax regime amid regulatory uncertainty, industry executives told ET.
After the Goods and Services Department, which slapped a Rs 40 crore GST demand on crypto exchange WazirX last month, the Directorate General of Goods and Services Tax Intelligence (DGGI) a law enforcement agency under the Union Ministry of Finance is scrutinising multiple crypto firms including Buyucoin and Unocoin.
Industry members said crypto platforms have failed to pay the precise amount of GST largely due to confusion over the tax applicable on different business models adopted by these firms.
For instance, exchanges like WazirX and CoinDCX that facilitate peer-to-peer transactions and charge a commission on each transaction, count this as their main source of revenue. Others such as Unocoin and CoinSwitch Kuber also act as a broker or an aggregator and buy and sell cryptocurrency to users, in turn making profits on these trades, a model that is stoking greater regulatory scrutiny, executives said.
“They (DGGI) are looking at the different models and asking us for an explanation on how we account for transactions and they’re collecting the GST that was missed,” said Unocoin co-founder Sathvik Vishwanath, adding that there were “some business model categorisation issues because of which it was unclear how much tax the (crypto) exchanges need to pay”.
He said the tax authorities were yet to communicate the final tax amount and penalty to the platform, which it was prepared to pay. DGGI did not reply to ET’s email queries until press time. CoinSwitch Kuber declined to comment.
ET earlier reported that GST at 18% rate was applied to WazirX after regulators said it had failed to pay the indirect tax on commissions earned in its native token WRX.
The department, which was investigating WazirX for allegedly evading Rs 40.5 crore in tax, later recovered from the company Rs 49.2 crore the GST owed plus interest and penalties, the December 31 report said.
