The Indian government has identified significant GST evasion worth ₹824.14 crore involving major cryptocurrency exchanges such as Binance, WazirX, CoinDCX, and CoinSwitch Kuber. However, only ₹122.29 crore has been recovered, including interest and penalties, according to Minister of State for Finance Pankaj Chaudhary’s written response in Parliament on Monday.
Among the crypto exchanges, Binance group’s M/s Nest Services Limited accounted for the most substantial evasion, totaling ₹722.43 crore. Despite this, the finance ministry has reported no recovery from the company to date.
WazirX, operated by M/s Zanmai Labs Pvt. Ltd, evaded GST amounting to ₹40.51 crore. The government recovered ₹49.18 crore from the platform, a sum inclusive of interest and penalties. Similarly, CoinDCX and CoinSwitch Kuber evaded GST worth ₹16.84 crore and ₹14.13 crore, respectively. Recoveries from these platforms stood at ₹20.86 crore for CoinDCX and ₹19.38 crore for CoinSwitch Kuber.
The finance ministry revealed that 47 Virtual Digital Asset Service Providers have registered as reporting entities under the Financial Intelligence Unit-India (FIU-India) pursuant to the Prevention of Money Laundering Act (PMLA), 2002. Income derived from cryptocurrency transactions is taxed at a flat rate of 30%, with a 1% tax deducted at source (TDS) applied to transactions exceeding ₹50,000 annually.
Cryptocurrencies are categorized as “Virtual Digital Assets” under Section 2(47A) of the Income Tax Act, which broadly includes most crypto assets while excluding items like gift cards and vouchers.
Since March 2023, crypto assets have fallen under the scope of the PMLA, mandating exchanges and service providers to adhere to anti-money laundering measures, including know-your-customer (KYC) norms. These efforts are supervised by FIU-India.
The classification of digital assets within the GST framework remains ambiguous, as no specific Harmonized System of Nomenclature (HSN) code or rate exists for these assets. The HSN code 960899, covering “other miscellaneous articles,” is currently used, with an 18% GST rate applicable. GST obligations arise only for entities or individuals with sales or turnover exceeding ₹40 lakh in a financial year or those who voluntarily register for GST.
The government’s crackdown highlights the challenges in regulating a rapidly evolving crypto industry and the necessity of stringent oversight mechanisms to ensure compliance.
