The recent crackdown by the GST Directorate General of Intelligence (DGGI) against almost half a dozen Cryptocurrency Service providers in India have refocused attention on the need for clarity on how cryptocurrencies and related services should be taxed.
Leader Cryptocurrency Exchange WazirX, which has been a major focus of the DGGI crackdown, has paid Rs 49.2 crore as GST with interest and penalties.
While the companies that offer cryptocurrency Related services have been on the radar of tax authorities due to tax evasion, cryptocurrency exchanges say the main problem is related to clarity in regulation.
"We strongly believe that regulatory clarity is the need of the moment for the Indian crypto industry. It will also provide us with more clarity on taxation so that we can work in sync with legislators and continue to be responsible industry players," he said. a spokesperson for Zanmai Labs Pvt. Ltd, which runs WazirX.
In addition to Zanmai Labs Pvt. Ltd, which manages WazirX, last week, the DGGI also raided the facilities of several other firms involved in cryptocurrency-related businesses, including Bitcipher Labs LLP, which manages Coinswitch Kuber, Neblio Technologies Private Limited, which manages CoinDCX, iBlock Technologies Private Limited, which manages BuyUcoin. and Unocoin Technologies Private Limited, which manages Unocoin.
According to the authorities, a tax evasion of Rs 70 million has been detected.
In reaction to the DGGI raids, iBlock Technologies Private Limited, which manages BuyUcoin, said: "The lack of clarity in the filing procedures led to some human errors on our part that were pointed out by the tax authorities and reported."
"As soon as the GST officials reported the matter, we dutifully paid all taxes along with the interest and penalties incurred. We offer our full cooperation and support to all regulators in creating a healthy regulatory framework for the burgeoning crypto industry in India, "iBlock Technologies Private Limited said in a statement.
Cryptocurrency issues have sparked wide interest and controversy. In 2018, the Reserve Bank of India (RBI) announced a comprehensive ban on cryptocurrencies and prohibited banks, NBFC, and other financial institutions from facilitating transactions for crypto-related entities.
However, in March 2020, the Supreme Court of India struck down the central bank's order. While the Supreme Court order has paved the way for financial institutions to facilitate cryptocurrency trading, there is still no clarity on taxes and other issues. There are no specific provisions on cryptocurrencies in the GST or in the income tax.
It was proposed to introduce a bill on cryptocurrencies in Parliament during the winter session. However, the government decided to withdraw the bill. A new bill is being considered.
Confusion related to taxes and other crypto-related issues is likely to prevail until a regulation is passed in Parliament.
(Only the headline and image of this report may have been edited by Business Standard staff; other content is automatically generated from a syndicated feed.)
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