Binance’s WazirX Targeted in Indian Tax Probe

A company owned by the cryptocurrency exchange Binance is one of the targets in India’s ongoing crackdown on alleged tax evaders, Bloomberg reported Monday (Jan. 3).

Binance’s local firm WazirX is under investigation by the goods and service tax (GST) authority in Mumbai, after the agency discovered alleged tax evasion of 400 million rupees (about $5.4 million), according to the report.

A separate investigation is also looking at some as-yet-unnamed foreign-owned mobile handset makers. That probe found that two of the companies had embellished their expenses and made unsupported remittances of more than 55 billion rupees (about $739 million), the report stated.

These investigations are arriving in advance of state elections and at the end of a financial year in which Prime Minister Narendra Modi’s administration is expected to miss its budget deficit goal, according to the report.

This latest crackdown comes about two weeks after India’s Income Tax Department carried out searches at the Indian headquarters of several Chinese mobile companies to ferret out evidence of possible tax evasion.

Read more: Indian Tax Officials Raid Chinese Mobile Companies

These searches followed an earlier investigation into the Chinese telecom vendor ZTE, which showed ZTE had allegedly made a 30% gross profit on equipment sales while reporting heavy losses, along with evidence of payments to apparently non-existent companies.

“Raids and searches are intrusive but we are likely to see more such action now as the government will move toward more risk-based tax audits and surveys owing to the deployment of sophisticated big data analytics and deeper data mining,” Amit Maheshwari, managing partner at Ashok Maheshwary and Associates, told Bloomberg.

Tax authorities said they recovered more than 490 million rupees (about $6.6 million) in GST, interest and penalties from WazirX, the report stated. Officials said the exchange was not depositing GST on commission from cryptocurrency transactions.

“There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid,” a WazirX spokesperson told Bloomberg. “However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax.”