The state of crypto in India is a bit complicated, to say the least. Not only is there any clear indication about what to expect, but there is also a lack of legislation for the current platforms. Also, it looks like the Indian crypto platforms are facing scrutiny for tax provisions.
Recently, the Goods and Services department slapped an Rs. 40 crore GST demand on WazirX. Besides this, the Directorate General of GST intelligence is scrutinizing various crypto firms, including Buyucoin and Unocoin.
Moreover, industry members state that crypto platforms haven’t paid the precise amount of GST due to confusion of tax applicable. Various crypto firms apply different business models, all of which have different tax structures.
Taking the example of WazirX, it facilitates peer-to-peer transactions, similar to CoinDCX. This means that these platforms charge a commission on each transaction, counting this as their main source of revenue.
On the other hand, Unocoin and CoinSwitch Kuber act as a broker/aggregators, allowing users to buy/sell crypto. According to reports, this model is garnering greater regulatory scrutiny.
Unocoin founder Sathvik Vishwanath said regarding this:
“DGCI are looking at the different models and asking us for an explanation on how we account for transactions. According to this, they are collecting the GST that went missing.
He also added:
“There was some business model categorization issues because of which it was unclear how much tax the crypto exchanges need to pay.”
Finally, he added that the tax authorities are yet to communicate the final tax amount and penalty to the platform.