Indian tax authority targets over 400 wealthy Binance traders in tax evasion probe: report

Indian tax authorities are investigating more than 400 high-net-worth Binance traders suspected of evading India's relatively high crypto taxes while trading on the world's largest cryptocurrency exchange, according to a report from The Economic Times. 

The traders are suspected of evading taxes on trades between 2022-23 and 2024-25, the report states, with India's Central Board of Direct Taxes asking departments in different cities to report actions by October 17 in an internal message. 

Crypto traders in India face a 1% upfront withholding on each crypto transfer (credited against the final bill), plus a 30% tax on profits, with surcharge and a 4% cess that can lift the effective rate to around 42.7% for top-bracket individuals. India's Union Minister Piyush Goyal recently said the government plans to double down on its efforts to develop a central bank digital currency (CBDC), while continuing to tax non-government-backed cryptocurrencies at a high rate, The Block previously reported. 

Binance was blocked from operating in India in late 2023, alongside eight other exchanges, after the country's Financial Intelligence Unit (FIU) accused the sites of operating illegally without complying with provisions of the country's Prevention of Money Laundering Act. The exchange re-entered India in August 2024, after paying a $2.25 million penalty and registering as a "reporting entity" with the FIU. 

That registration set the stage for the current probe, according to the report, which argues the registration "paved the way" for Binance to share information on suspected tax evaders with the Indian government. The probe is also examining peer-to-peer payments facilitated by Binance in India but settled using domestic bank accounts, Google Pay, or cash, though the latter option was later discontinued. 

Separately, Binance is working to contain the fallout from depegs in several markets, pledging to compensate traders that experienced losses as a result, as the crypto industry reels from record-high liquidations.