In Brief:
- The GST Commissionerate of Mumbai Zone, has detected a tax evasion of Rs 40.5 Crores in the business activities of WazirX.
- Also, the Commissionerate has recovered Rs 49.20 crores in cash related to the evaded tax, the interest and also the penalty.
- WazirX was guilty of not paying GST on the commission that was earned on transactions in WRX.
The Ministry of Finance has issued a press release stating that The GST Mumbai East Commissionerate of Mumbai Zone, has detected a GST Evasion of Rs 40.5 Crores while investigating the business activities of cryptocurrency exchange Binance’s local unit, WazirX.
The press release also announced that the Commissionerate has also recovered Rs 49.20 crores in cash related to the Goods and Services Tax (GST) that has been evaded, the interest and also the penalty.
Explaining the clamp-down, it is informed that as a part of its operation, WazirX is charging commission on each transaction in cryptocurrency from both the buyer and seller.
However, the rate of commission being different for both the modes of transactions, the transaction taking place in rupees earns the commission of 0.2% and the transaction in WRX gets the commission of 0.1%.
It was revealed during the investigation that WazirX used to collect revenue from commission as trading fees, deposit fees and withdrawal fees. Yet, it was only paying GST on commission earned in rupee and not on the other commission that was earned on WRX.
The GST evasion of Rs 40.5 crores detected in the investigation was paid along with interest and penalty on December 30. Thus, a total of Rs 49.2 crores were recovered on the spot from the WazirX while further investigations are still going on.
In what seems like a warning to tax evaders, it is informed that the officers of CGST Mumbai zone are investigating business transactions related to e-commerce, online gaming, Non-Fungible Tokens.
In fact, a report by The Economic Times suggests that around Rs 70 crore worth of tax evasion has been detected during the crackdown on cryptocurrency trade by Mumbai CGST and DGGI.
It is also reported that other Crypto players including CoinSwitch Kuber, CoinDCX, BuyUCoin and Unocoin are under the radar of the Directorate General of GST Intelligence as these exchanges too have not been paying 18% GST on the transaction fees charged by them.
The Central GST department will investigate all the cryptocurrency exchanges in Mumbai zone in the coming days.
With rising crypto crimes and frauds, it is self-evident that the regulators are clamping down on crypto firms and also, at the same time, cautioning general users against the cons of it.
Hence, it was not a surprise when a Hyderabad IPS (Indian Police Service) officer, Shikha Goel cautioned against falling prey to fraudsters and not transferring cryptocurrencies to unauthorized private wallets at a public event.
