India’s Financial Intelligence Unit (FIU) is seeking to recover approximately $345 million in Goods and Services Tax (GST) from seven foreign cryptocurrency exchanges that conducted business in the country.
According to sources cited by the Economic Times, India’s anti-money laundering agency is preparing to review petitions from these exchanges — Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp. These platforms were previously banned from operating in India after receiving show-cause notices from the regulator.
The hearings are expected to take place this week, during which the exchanges will present their cases for resuming operations in India by proving their compliance with the country’s Prevention of Money Laundering Act, which requires them to function as reporting entities.
Challenges with Compliance and GST Obligations
As reporting entities, these cryptocurrency platforms must perform thorough customer due diligence and report any suspicious activity. However, merely complying with these obligations may not be sufficient to gain access to the rapidly growing Indian crypto market, which ranked first in Chainalysis’ 2024 Global Crypto Adoption Index, reflecting the increasing popularity of centralized exchanges.
In addition to demonstrating compliance, the exchanges will also need to pay fines, with the exact amounts being determined based on their interactions with the regulator. The FIU is looking to collect about ₹2,900 crores (approximately $345.09 million) in GST from these seven exchanges.
GST is a broad-based tax on the production, sale, and consumption of goods and services in India. Any foreign company offering services to Indian customers is required to register under the GST system and pay the relevant taxes.
Other Cryptocurrency Exchanges May Also Be Targeted
The FIU calculates the unpaid tax based on transaction fees that these platforms earned from Indian customers before they were banned in December. For example, Binance was recently ordered to pay $86 million in GST after it registered with the authorities and settled a $2.25 million fine to resume its services.
According to sources, other foreign cryptocurrency exchanges that have operated in India may also face notices to ensure that all entities meet their tax obligations and comply with the country’s regulations.
However, the source also noted that even if these exchanges meet the regulatory requirements and pay the necessary penalties, it may still be some time before they are permitted to operate again in India. Previous reports suggest that this process could continue until March 2025.
India Seeks $345M in Taxes from Kraken, Huobi, and Other Offshore Crypto Exchanges was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.