Indian crypto exchange WazirX has reportedly paid over $6.6 million (49.2 crore rupees) following non-payment of Goods and Services Tax (GST) on trade commissions. The total recovery includes the pending tax of $5.43 million (40.5 crore rupees), the interest and a penalty for non-payment.

Government officials from the Central GST and Central Excise committee (CGST Mumbai Zone) recovered the funds from the crypto exchange after detecting a GST evasion of $5.43 million on the commissions. A typical GST fraud involves creating fake invoices without actually moving the goods between the seller and the buyer.

Officers of CGST Mumbai East comm’te have detected GST Evasion of Rs 40.5 Cr. on commission of Wazir X Crypto Currency & recovered Rs 49.2 Cr. in cash as GST, interest & Penalty today on 30.12.2021 from Zanmai Labs Pvt. Ltd. @nsitharamanoffc @mppchaudhary @cbic_india @PIBMumbai

— CGST Mumbai Zone (@cgstmumbaizone) December 30, 2021

According to local media Economic Times, the tax department detected that WazirX uses its in-house WRX tokens for commissions, which were distributed by Zanmai Labs. Further investigation revealed that the crypto exchange missed out on paying 18% tax on the total tokens issued based on its market price.

The investigators revealed that WazirX paid GST on the 0.2% commission it charges users for making trades with local currency i.e. the rupee, clarifying:

“But in cases where the trader opts for transaction in WRX coins, the commission charged is 0.1% of trading volume and they were not paying GST on this commission.”

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