Binance Challenges $86 Million Indian Tax Notice: Source

Binance is currently challenging a tax showcause notice issued by India's Directorate General of Goods and Services Tax Intelligence (DGGI). The notice, issued last week, demands nearly $86 million and covers the period from June 2017 to March 2024. This marks a formal step by the DGGI, which initiates action when there are suspicions of tax evasion.

According to a source familiar with the matter, the DGGI's Ahmedabad chapter issued the notice after alleging that Binance had collected fees from Indian customers trading on its platform during the specified period. This may be the first time the DGGI has targeted an international crypto exchange with such a notice, although the authority has previously acted against Indian crypto exchanges.

The DGGI is responsible for the collection, collation, and dissemination of intelligence related to indirect tax evasion and operates under the Ministry of Finance.

"We are currently reviewing the details of the notice and are fully cooperating with the Indian tax authorities," a Binance spokesperson told CoinDesk.

The DGGI has not yet responded to CoinDesk's request for comment. In June 2024, Binance was fined approximately $2.2 million for failing to adhere to India’s anti-money laundering regulations. The exchange also received approval from the Financial Intelligence Unit (FIU) as a registered entity. It is important to note that the DGGI's investigation is separate from the FIU’s actions.

Showcause notices do not always lead to financial penalties. Earlier this month, the DGGI dropped some allegations against Infosys after the tech company challenged them. Binance is reported to have earned over $476 million (approximately 40 billion rupees) in transaction fees, which were transferred to Nest Services, a Seychelles-based subsidiary of Binance Group.

"Binance is, and has always been, committed to complying with relevant domestic laws," the company spokesperson added.

The services in question are categorized as Online Information and Database Access or Retrieval Services (OIDAR), which are provided over the internet without a physical interface with the service provider. This categorization aims to prevent overseas service providers from having an unfair advantage over Indian providers.