GST evasion: Govt recovers ₹95.86 crore from crypto exchanges

The government on Monday said it has recovered ₹95.86 crore from 11 cryptocurrency exchanges for evading Goods and Services Tax (GST).

The recovered amount includes penalty and interest. The total quantum of tax evasion detected was ₹81.54 crore.

Zanmai Labs, the parent company of WazirX, India's largest crypto exchange, evaded ₹40.51 crore in GST, data released by the Parliament showed. The Binance-owned crypto exchange later paid ₹49.18 crore including interest and penalty.

CoinDCX was second on the list with an evasion of ₹15.7 crore followed by CoinSwitch Kuber at ₹13.76 crore. The recovery amount from CoinDCX and CoinSwitch Kuber stood at ₹17.10 crore and ₹16.07 crore respectively.

Crypto exchange UnoCoin evaded ₹2.97 crore and paid ₹4.44 crore as penalty and interest.

In a written reply to Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the government does not collect any data on cryptocurrency exchanges.

This comes days after the Parliament passed the crypto tax law. As per the new law, gains in cryptocurrencies will be taxed at 30% and loss from the transfer of virtual digital assets will not be allowed to be set off against the income arising from transfer of another virtual digital asset. This would apply to all "virtual digital assets" including Bitcoin and NFTs.

Infrastructure costs incurred in mining of VDA will not be treated as cost of acquisition and the same will not be allowed as deduction under the Act. A 1% TDS will also be held back each time you sell a crypto asset, whether there is profit or loss, and will be set-off against the crypto tax at the end of the year.

Meanwhile, the crypto industry has expressed its unhappiness with the "no set off of losses" rule. As per Nischal Shetty, founder and CEO, WazirX, this move will make day-traders incapable of saving on taxes even if they aren't in the income tax brackets currently.

It's a continued effort to isolate and disincentivise crypto currency related activities in India, said Rohinton Sidhwa, partner, Deloitte India. "The mining expense disallowance is unlikely to impact the majority of traders, however the prevention of offset between different cryptos will probably negatively impact many traders."

Last month, Finance Minister Nirmala Sitharaman had said that banning or not banning cryptocurrencies in India will come subsequently after consultations.

Taxing crypto income does not mean that the government is legalising cryptocurrency, she had said.