Consumer organisation COF addresses letter to Finance Minister to investigate possible tax violation by Rario

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In a letter to the finance minister, the consumer rights group Consumer Online Foundation requested an investigation into the activities of the cricket collectibles and gaming platform Rario for possible violations of tax regulations relating to cryptocurrencies.

According to the letter from the COF, Rario is allegedly engaging in unfair business practices that violate customers’ rights. It further says that the business has been using dishonest marketing techniques and deceiving clients throughout its dealings.

COF says that Rario describes itself as a business that deals in the buying and selling of digital player cards and omits to mention on its website that it is actually an NFT and cryptocurrency platform, according to Business Standard.

“Customers purchase player cards in either INR or USD currency, which are loaded into their ‘Rario wallet’, without realising that they are essentially buying cryptocurrency. CIRCLE, a company that handles payments on behalf of Rario, is an on-ramp, off-ramp service provider that converts incoming Fiat (INR or USD) to USDC, a cryptocurrency. Such transactions have multiple negative impacts on unsuspecting consumers,” the letter said.

According to the regulations of the Government of India, users must present evidence of payment since USDC is a cryptocurrency and tax must be paid on transfers to virtual digital assets (VDAs).

However, it claimed that consumers are unable to account for the VDA tax that the Government of India mandates since they are unaware of Rario’s INR to USD to USDC to NFT to USDC to USD to INR transaction path.

According to the guidelines set forth by the Finance Ministry, organizations that deal in VDAs are now deemed “reporting entities” for purposes of the Prevention of Money Laundering Act (PMLA) and are required to keep records of KYC information or documentation proving the identities of their clients and beneficial owners.

It then claimed that Rario is in violation of anti-money laundering legislation since users can deposit and trade or send money overseas without providing or being verified by means of Officially Valid Documents, such as PAN.

In accordance with the Liberalized Remittance Scheme (LRS) of the Foreign Exchange Management Act (FEMA) 1999, Rario is allegedly promoting foreign transactions without any transaction restrictions, according to COF founder Bejon Kumar Misra.

The funds are leaving India without utilizing approved channels like LRS, which establishes rules for outward remittance from India. Misra said, “We have requested the Prime Minister and the Finance Minister to urgently investigate the matter.”