India’s Financial Intelligence Unit is looking to recoup at least $345 million in goods and services tax from 7 seven foreign cryptocurrency exchanges that operated in the nation.
Sources familiar with the matter told the Economic Times that India’s anti-money laundering body is ready to hear the petitions of the exchanges—Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp—which were barred from offering their services following show-cause notices sent by the regulator.
The hearing will be held sometime this week where these companies will present their cases for resuming operations in India by demonstrating their willingness to comply with India’s Prevention of Money Laundering Act as a reporting entity.
Compliance challenges and GST liabilities loom large
As a reporting entity these exchanges are required to conduct strict customer due diligence processes and report suspicious activity, but just adhering to these requirements won’t be enough to secure a re-entry into one of the world’s fastest-growing crypto economies, which ranked first in Chainalysis’ 2024 Global Crypto Adoption Index, showing increased usage of centralized exchanges.
The source added that exchanges will also be required to pay a fine, the amount of which will be determined based on their submissions to the regulator. Further, the regulator expects to collect approximately inr 2,900 crores (roughly $345.09 million) in GST from the seven trading platforms.
The GST is a comprehensive indirect tax imposed on the production, sale, and consumption of goods and services across India. Any foreign entity operating within India’s borders is required to register under the GST framework and pay the applicable tax when offering services to Indian customers.
The FIU calculates the outstanding liabilities based on the transaction fees these platforms collected from Indian customers before the December ban, as seen in the case of Binance which was asked to clear $86 million in pending GST after it completed registration and paid a $2.25 million fine to resume operations.
Additionally, according to the source, the GST authorities are considering issuing notices to other foreign cryptocurrency exchanges that have operated within India, ensuring all entities meet their tax obligations and align with India’s regulatory standards.
However, the source indicated that it could still “take a while” before the exchanges are allowed to resume operations, even if they agree to meet all regulatory demands, clear penalties, and align with stringent compliance measures. Based on a previous report from crypto.news, this process could extend until March 2025.
Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
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