India Probes 400 Binance Traders for Alleged Crypto Tax Evasion: Report

Core Insights - Indian tax authorities are investigating over 400 high-net-worth traders using Binance for suspected large-scale crypto tax evasion [1][9] - The investigation is led by the Central Board of Direct Taxes (CBDT) and focuses on activities from 2022 to 2025, with findings due by October 17 [3][9] Taxation Details - The traders under investigation allegedly evaded India's high crypto tax rates, which include a 1% withholding tax on transactions and a 30% tax on profits, leading to an effective tax rate of 42.7% for top earners when surcharges and a 4% cess are included [4][9] Regulatory Environment - The Indian government maintains a strict stance on digital assets, with recent reaffirmations of commitment to a central bank digital currency (CBDC) while heavily taxing private cryptocurrencies [5] - Binance was banned from operating in India in late 2023 due to accusations of violating the Prevention of Money Laundering Act, but later re-entered the market in August 2024 after paying a $2.25 million fine and registering as a "reporting entity" [5][6] Investigation Focus - The investigation also examines peer-to-peer (P2P) transactions conducted through Binance, which were settled using local bank accounts, Google Pay, or cash, with authorities suspecting these methods may have concealed taxable income [6][7] - Although cash settlements have been discontinued, the ongoing scrutiny adds to the regulatory challenges faced by Binance, which is also dealing with issues related to token depegs and system failures in other markets [7]