Indian Govt Tracks 11 Crypto Exchanges Accused of Tax Evasion

Key Insights:

• Indian tax authorities come down firmly against crypto exchanges.
• Top Indian crypto exchanges have been accused of tax evasion.
• A sum of around $12.6 million has been seized as part of a ‘special anti-tax evasion drive.’

With the global crypto market cap showing no signs of slowing down, the larger market seemed to be bullish on the top coins like bitcoin, ether, Solana, etc. However, regulators and governments of certain nations were still skeptical of cryptocurrencies.

Authorities recently uncovered another tax evasion case by big exchanges in India, where laws around crypto have received mixed reactions from the industry.

Crypto Exchanges Evading Tax?

Indian tax authorities recently seized a sum of close to $12.6 million from 11 crypto exchanges on allegations of tax evasion.

A government reply in the Lok Sabha today reveals action against some of India's largest #crypto exchanges for alleged GST evasion. Seen in sync with the budget proposals for crypto tax, the scenario looks bleak for the industry. #bitcoin #CryptoNews pic.twitter.com/Klbq52Vf7s

— Neil Borate (@ActusDei) March 28, 2022

Previously, the Directorate General of GST Intelligence (DGGI), who overlooks tax collection in India, seized close to $11.0 million in taxes and another $145,000 in penalties. Reportedly, in January this year, India’s Minister of State for Finance Pankaj Chaudhary, said that the amount was closer to $12.6 million.

Early in this year, alongside growing crypto adoption in the Indian subcontinent, the authorities seemed to be getting cautious of the high-speed adoption. In January 2022, DGGI confirmed seizing funds from six crypto exchanges. The names included some of India’s largest exchanges – WazirX, CoinDCX, BuyUCoin, and Unocoin.

On Monday, Chaudhary updated the number of exchanges involved in the tax evasion to 11, which was an almost double spike over the last couple of days.

Early this year Indian tax authority conducted detailed searches on WazirX, CoinSwitch Kuber, CoinDCX, BuyUCoin, and Unocoin. Since then, a crypto tax evasion of $5.3 million has been uncovered.

In a statement tax authority has stated that the case was part of a ‘special anti-tax evasion drive.’

New Crypto Tax Regime

The Indian government has been tightening its grip on the cryptocurrency market. Not only did the authorities target cryptocurrency exchanges but has also introduced the rather criticized new crypto tax rules.

From April 1 onwards, Indian crypto companies must pay a capital gains tax of 30% on crypto transactions. Apart from the capital gains tax, Indians buying or selling crypto will have to pay a 1% tax deducted at the source (TDS) by July 1.

However, the government’s recent regulation of cryptocurrencies hasn’t received any major applause from industry participants. In a recent statement, an Indian member of parliament warned that imposing a 1% TDS on every crypto transaction could extinguish the adoption and growth seen by the nascent asset class.

Furthermore, Indian Parliament member Ritesh Pandey raised concerns regarding the 1% TDS on cryptocurrency transactions. However, looking at the market gain momentum seems like bullishness could overshadow the regulations in the near term.