- Foreign Crypto Exchanges Under Investigation
- Compliance Challenges and GST Liabilities
- Prospects for Resuming Operations in India
India’s Financial Intelligence Unit is looking to recoup at least $345 million in goods and services tax (GST) from seven foreign cryptocurrency exchanges operating in the nation.
Foreign Crypto Exchanges Under Investigation
Sources familiar with the matter revealed that India’s anti-money laundering body is set to hear petitions from exchanges Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp, which were barred from offering their services following notices from the regulator. The hearing is scheduled for this week, where these companies will plead their cases for resuming operations in India by demonstrating their willingness to comply with the Prevention of Money Laundering Act.
Compliance Challenges and GST Liabilities
As reporting entities, these exchanges are required to conduct strict customer due diligence and report suspicious activity. However, mere adherence to these requirements will not be sufficient for re-entry into the rapidly growing Indian crypto market. The exchanges will also need to pay fines, the amounts of which will be determined based on their submissions to the regulator. The regulator expects to collect around INR 2,900 crores ($345.09 million) in GST from the seven trading platforms. GST is a comprehensive indirect tax levied on the production, sale, and consumption of goods and services across India. Any foreign entity operating within India is required to register under the GST framework and pay the applicable tax when offering services to Indian customers.
Prospects for Resuming Operations in India
India’s FIU aims to collect taxes from other foreign crypto exchanges operating in the country, ensuring all entities meet their tax obligations and regulatory standards. However, according to the source, it may still take a while before the exchanges are allowed to resume operations, even if they agree to comply with all regulatory requirements and clear penalties. This process could extend until March 2025.
India's FIU is open to considering the return of foreign crypto exchanges to the market, provided they adhere to all regulatory standards and settle significant tax liabilities.
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