Binance, the world's largest crypto exchange, gets Rs 722 crore GST from DGGI

In a groundbreaking move, the Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) has issued a show cause notice to Binance, the world’s largest cryptocurrency exchange, demanding Goods and Services Tax (GST) payment of Rs 722 crore. This marks the first time the DGGI has issued such a notice to a cryptocurrency firm, setting a significant precedent in India’s efforts to regulate the rapidly growing virtual currency market.
Sources confirmed that the notice was issued to Binance for collecting fees from Indian customers trading in virtual digital assets (VDAs) on their platform, categorized under online information database access or retrieval (OIDAR) services.
Earlier this year, Binance received approval from India’s Financial Intelligence Unit (FIU) to register as a virtual asset service provider (VASP). However, the company was slapped with a Rs 18 crore penalty from the FIU last month for non-compliance with anti-money laundering (AML) regulations.
Despite being a major player in the global cryptocurrency market, with at least 40% market share and operations across more than 150 countries, Binance had not registered under the Indian GST framework. This oversight has now brought the company under the scrutiny of Indian tax authorities.
“Binance reportedly earned at least Rs 4,000 crore from transaction fees charged to Indian customers. The company has a user base of 90 million users globally, including a substantial number of customers from India too. Detailed investigation revealed that the earnings of these fees were credited to the account of a Binance Group Company — Nest Services Limited — based in Seychelles,” a top source privy to the development said.
In fact, Binance is reportedly facing a trial in a Nigerian court for alleged tax evasion, following a crypto crackdown in the country.
To make Binance compliant with the GST regulations, DGGI Ahmedabad zonal unit also sent emails to Binance group companies in Seychelles, the Cayman Islands and Switzerland, which did not elicit a response. Binance appointed a local counsel in India to liaise with the DGGI, marking the first step towards resolving this significant tax compliance issue.
Sources confirmed that DGGI is also closely monitoring financial transactions and activities of online gaming platforms and marketplaces for the possibility of tax evasion.
The Indian GST regime mandates that foreign service providers pay GST for services provided to Indian residents, particularly under the OIDAR category. As the investigation continues, other cryptocurrency exchanges operating both overseas and within India are also expected to face scrutiny from tax authorities, said sources.