Cryptocurrency Trade Volumes in India Plunges After Hefty Taxes

Trading volume on three major cryptocurrency exchanges in India has plummeted 72.5% on average since July 1, when a 1% transaction tax was introduced in the country.

The Tax Deducted at Source (TDS) came into effect on July 1 and appears to have negatively affected traders as trading volumes fell 37.4% on BitBNS and 90.9% on CoinDCX on July 3 . Volumes have stabilized slightly since hitting lows, but are still down. 56.8% on average, according to to CoinGecko.

Indian YouTube channel Crypto India tweeted on July 4 that trading revenue, based on a 0.1% trading fee, is abysmal due to low volume levels. At the bottom of the volume levels, WazirX, CoinDCX, and Zebpay received a combined $21,649 per day.

For now, crypto traders like Mumbai’s Shounak Shetty are also suffering. Shetty saying Economic Times on July 4 that he believes the TDS and 30% income tax on cryptocurrency transactions in India will be detrimental to the talent base in the South Asian nation. He said,

“Like other traders, I am trying to find out if it is possible to stay profitable on Indian bourses. This will lead to another brain drain of professional traders to other countries like Dubai that are more welcoming.”

WazirX Policy Analyst Anuj Chaudhary explained on the June 30 episode from The WazirX Show on YouTube that the 1% TDS applies to “digital assets, be it NFTs, crypto assets, metaverse, or any type of transaction that takes place over public blockchains.”

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The tax will be in effect for three months as a test to determine the impact it has on the market. While trading volumes are low now, policymakers want to see their results over a longer period of time.

Only gift cards used to obtain goods or obtain a discount, mileage points, reward points and loyalty incentives without monetary considerations, and subscriptions to websites, platforms or applications are allowed. exempt of the tax

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Chaudhary’s counterpart on the show, Muthuswamy Iyer, Head of Legal Affairs at WazirX, accurately predicted that the TDS would have a negative impact on high-volume, high-value traders on Indian platforms. He added that he believes the TDS would also deter newcomers and low-frequency traders from gaining crypto exposure.

Average daily transaction volume between WazirX, Zebpay, BitBNS, and CoinDCX in June was around $9.6 million per day, but it dropped to around $5.6 million as of July 4.