The indirect taxes (I-T) department has detected goods and services tax (GST) evasion of around Rs 40 crore by Zanmai Labs Private Ltd, which manages cryptocurrency exchange WazirX. The department recovered Rs 49.2 crore in GST dues.
“Officers of central GST, Mumbai East committee, have detected GST evasion of Rs 40.5 crore on commission of Wazir X cryptocurrency. They recovered Rs 49.2 crore in cash as GST, interest and penalty on December 30 from Zanmai Labs,” said CGST Mumbai Zone of the Central Board of Indirect Taxes and Customs (CBIC) on Twitter.
As per a detailed press release by the government late on Friday, Wazir X exchange is managed by Zanmai Labs Pvt Ltd and cryptocurrency ‘WRX’ is owned by Binance Investment Co. Ltd, Seychelles. WazirX was registered as Zanmai Labs in December 2017 as a domestic cryptocurrency startup.
The exchange provides option to a trader to transact in Rupee or WRX, which has to be purchased on the WazirX platform. WazirX chief executive and founder Nischal Shetty is one of the two directors of Zanmai Labs.
Business Standard contacted Shetty, who declined to comment, but referred a Zanmai spokesperson.
“Zanmai has been diligently paying tens of crores worth of GST every month. There was an ambiguity in the interpretation of one of the components that led to a different calculation of GST. However, we voluntarily paid additional GST in order to be cooperative and compliant. There is no intention to evade tax,” the spokesperson said.
“We 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,” he said.
According to the CBIC, the matter relates to WazirX launching its own currency, but not paying GST on it.
“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,” the press release stated, adding that GST at the rate of 18 percent is applicable on this transaction fees.
This action comes even as there is continued uncertainty over laws and regulations governing cryptocurrencies.
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