India's DGGI Slaps Binance with Rs 722 Crore GST Fine (US$86.88 Million)

India — The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued a show cause notice to Binance, demanding a substantial fine of ₹722 crore ($86.88 million) for alleged violations of Goods and Services Tax (GST) regulations. The notice accuses Binance, a leading global cryptocurrency exchange, of collecting approximately ₹4,000 crore in trading fees from its Indian users without proper registration under the Indian GST framework.

Allegations Against Binance

Binance, which holds a significant market share in the global cryptocurrency sector and operates in over 150 countries, is under scrutiny from Indian tax authorities for its lack of compliance with local GST laws. The company reportedly earned around ₹4,000 crore from transaction fees charged to Indian customers. Binance, with a global user base of 90 million, has had its financial practices in India closely examined, especially after it was revealed that these earnings were attributed to Nest Services Limited, a Binance Group entity based in Seychelles.

Compliance Issues and Non-Response

The DGGI Ahmedabad zonal unit has issued the fine notice due to Binance’s failure to adhere to Indian GST regulations. Despite multiple attempts to contact Binance’s offices in Seychelles, the Cayman Islands, and Switzerland via email, the DGGI has not received any response. Indian GST laws require foreign service providers to pay GST on services rendered to Indian residents, particularly under the Online Information and Database Access or Retrieval (OIDAR) category.

Recent Penalties and Legal Challenges

Earlier this year, Binance was authorised by India’s Financial Intelligence Unit (FIU) to register as a virtual asset service provider (VASP). However, last month, the FIU imposed an ₹18 crore fine on Binance for non-compliance with anti-money laundering (AML) regulations. Additionally, Binance is currently facing a trial in Nigeria for alleged tax evasion, following a crackdown on cryptocurrency activities in the country.

The ongoing scrutiny highlights the regulatory challenges that cryptocurrency exchanges face as they navigate compliance with varying global and local regulations.