Central Goods and Services Tax (CGST) Mumbai Zone said it has detected GST evasion of Rs 40.5 crore on commission earned by cryptocurrency exchange WazirX. The tax department recovered Rs 49.2 crore from the company as GST dues plus interest and taxes on Thursday evening.
“Officers of CGST Mumbai East comm’te have detected GST Evasion of Rs 40.5 Cr. on commission of Wazir X Crypto Currency & recovered Rs 49.2 Cr. in cash as GST, interest & Penalty today on 30.12.2021 from Zanmai Labs Pvt. Ltd,” CGST Mumbai Zone said in a tweet. The indirect tax department has contended that that WazirX issued its own cryptocurrency, WRX coins, but did not pay the applicable 18 per cent GST on these coins. The GST rate for services in the financial sector is 18 per cent.
A domestic cryptocurrency exchange, WazirX was registered as Zanmai Labs Private Limited on 21 December 2017. WazirX was acquired by Binance in November 2019. A spokesperson for Zanmai Labs said there is ambiguity in interpretation of the levy but the company voluntarily paid additional GST.
“Zanmai Labs Pvt. Ltd. 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. However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax,” the spokesperson said.
“That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry. It will also 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,” the person added.
The firm is charging commission on each transaction in cryptocurrency from buyer and seller both. However, the rate of commission is different for both the transactions. The transaction in rupee attracts the commission of 0.2 per cent and transaction in WRX attracts the commission of 0.1 per cent, the Finance Ministry said.
“During the investigation it came to notice that the firm used to collect revenue from commission as trading fees, deposit fees and withdrawal fees. It was paying GST only on commission earned in rupee but was not paying GST on commission earned in WRX.