Indian tax officers recovered US$6.62 million from WazirX to evade commissions

According to reports, Indian cryptocurrency exchange WazirX paid more than 6.62 million U.S. dollars (4.92 billion rupees) after unpaid goods and services tax (GST) for trade commissions. The total recovery includes USD 5.43 million (Rs 405 million) in pending taxes, interest and unpaid fines.

The government officials of the Central Goods and Services Tax and the Central Consumption Tax Commission (CGST Mumbai District) recovered funds from the cryptocurrency exchange after they detected an evasion of US$5.43 million in goods and services tax on commissions. Typical GST fraud involves creating false invoices without actually moving the goods between buyers and sellers.

according to In the local media Economic Times, the tax department discovered that WazirX used its internal WRX tokens as a commission, which were distributed by Zanmai Labs. Further investigation revealed that the cryptocurrency exchange missed the 18% tax on the total issued tokens based on its market price.

Investigators revealed that WazirX charges users a 0.2% commission to pay GST for transactions in local currency (i.e. rupees), and clarified:

“But if a trader chooses to trade with WRX tokens, the commission charged is 0.1% of the transaction volume, and they do not pay GST for this commission.”

It should also be noted that WazirX and WRX tokens are owned by Binance, which is the world’s largest cryptocurrency exchange by trading volume. According to a spokesperson for Zamak Laboratories, the non-payment of taxes is related to a misunderstanding of the goods and services tax rules:

“We voluntarily pay additional taxes on goods and services to maintain cooperation and compliance. There has been and is no intention of tax evasion.”

WazirX CEO Nischal Shetty has previously told Cointelegraph that regulatory clarity is important for retail adoption. He also warned that overnight supervision could damage the progress of the crypto ecosystem and leave holes for bad actors:

“There is a 2.5 trillion dollar market, and it will not wait for any country to join. I have been posting’#IndiaWantsCrypto’ on Twitter for more than 1,000 days, and the only goal is to implement crypto regulation in India.”

Although the concept of goods and services tax is fairly new in the region, the Indian government has previously agreed to show leniency to defaulters and fraudsters-usually with fines and a lower probability of imprisonment to resolve such cases.

WazirX has not yet responded to Cointelegraph’s request for comment.

related: The Indian Trade Organization recommends encryption’s “special grade security” status

To help the Indian government formulate encryption laws, the Federation of Indian Industries (CII) proposes to treat cryptocurrencies as a special class of securities.

A report released by the non-government trade association shows that CII proposes to formulate new regulations around the emerging crypto market instead of supervising it in accordance with the existing securities laws.

As reported by Cointelegraph, CII recommends the establishment of a special income tax and goods and services tax law, unless participants specifically treat cryptocurrencies as “stocks in transactions”, or treat cryptocurrencies as an asset for tax purposes category.