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Binance faces another regulatory challenge as India’s Ahmedabad zonal unit of the Directorate General of Goods and Services Tax Intelligence (DGGI), a government intelligence agency for matters regarding the violation of the Goods and Service Tax (GST), issued the crypto exchange an almost $86 million tax show-cause notice.

DGGI accuses Binance of collecting fees from Indian customers trading on its platform, earning almost $4.8 million (4,000 crore rupees), The Times of India reported on Aug. 6.,

Providing more information on the notice, a source “privy to the development” told the outlet:

“Detailed investigation revealed that the earnings of these fees were credited to the account of a Binance Group Company — Nest Services Limited — based in Seychelles”

Read more: India’s Financial Intelligence Unit slaps $2.3M fine on Binance

While the government has taken action against several local crypto exchanges like WazirX, this is the first time that India’s DGGI has taken action against an international crypto agency.

The Indian government has neither claimed that cryptocurrencies are legal nor is it banned; however, the government believes it is important for these virtual digital assets to be taxed. Hence, the crypto tax was introduced in the Financial Bill 2022. 

As per the Indian law of the Financial Bill, 2022 under section 115BBH, a 30% tax will be levied on crypto income and 1% TDS on payments made on the transfer of virtual digital assets (VDAs). 

Binance, on the other hand, has decided to challenge the tax notice issued by the government authorities. Speaking to CoinDesk, a spokesperson from Binance said, “We are currently reviewing the details of the notice and are fully cooperating with the Indian tax authorities.”

Read more: SEC to amend Binance lawsuit, crypto classification in question

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