WazirX Evaded GST, Alleges Tax Authority; Crypto Exchange Blames Ambiguity
The goods and services tax authority said it detected "tax evasion" by cryptocurrency exchange WazirX during its investigation into business transactions related to new-age and digital space.
The GST Mumbai-East Commissionerate has alleged tax evasion of Rs 40.5 crore by the exchange, the authority said in a statement. It recovered Rs 49.20 crore from the exchange as tax evaded, interest and penalty.
But Zanmai Labs Pvt., which manages WazirX, said the alleged evasion was not intentional.
“[The company] has been diligently paying tens of crores worth of GST every month. There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid,” it said in a statement. “However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax.”
Zanmai Labs said the Indian crypto industry needs regulatory clarity as that will “provide us with more clarity on taxation so that we can work in sync with the lawmakers, and continue to be a responsible industry player”.
According to the GST authority’s statement, the exchange provides the option to transact in rupees or WRX, utility tokens owned by Binance Investment Co. Ltd, Seychelles. The WRX have to be purchased from WazirX platform.
The firm charges commission on each transaction from the buyer and the seller. A rupee transaction attracts a commission of 0.2%, and WazirX charges 0.1% on WRX.
During the investigation, it came to notice that the platform earned commission on trading, deposit and withdrawal through rupee and WRX transactions, the statement said. But it paid GST only on what it earned via rupee transactions, and not on WRX.
At a GST rate of 18%, the company had not paid tax worth Rs 40.5 crore as on Dec. 30, 2021, the tax authority claimed. Along with interest and penalty, the authority recovered Rs 49.2 crore on the spot.
Further investigation is in progress.
The investigation into emerging businesses like e-commerce, online gaming, non-fungible tokens to identify the areas of possible tax evasion will be intensified, it said.