Indian Crypto Trading Volumes Decrease After High Taxes
Indian crypto traders may be quitting since they must now factor in a 30% income tax and a 1% transaction fee on crypto deals, causing exchange traffic to fall.
Trading volume on three main Indian crypto exchanges had dropped 72.5 per cent on average since July 1, when the government imposed a 1% transaction fee.
TDS went into effect on July 1 and appears to have had a detrimental impact on traders, as exchange volumes decreased from 37.4 percent on BitBNS to 90.9 percent on CoinDCX on July 3. According to CoinGecko, volumes have steadied marginally since the lows but are still down 56.8 per cent on average.
On July 4, the Indian YouTube channel Crypto India reported that exchange profits are terrible owing to low activity levels, based on a 0.1 per cent trading charge. WazirX, CoinDCX, and Zebpay raked in a total of $21,649 daily at the lowest volume levels.
Crypto dealers like Mumbai’s Shounak Shetty are also suffering. Shetty told the Economic Times on July 4 that he feels the TDS and 30% income tax on bitcoin exchanges in India will harm the country’s talent pool. He stated:
“Like other traders, I’m attempting to determine whether it’s viable to remain successful on Indian exchanges.” This would result in another brain drain of expert merchants to more friendly nations like Dubai.”
Anuj Chaudhary, a Policy Analyst at WazirX, noted on YouTube the June 30 broadcast of The WazirX Show. The 1% TDS was charged on digital assets, whether NFT, crypto assets, metaverse, or any transactions happening on top of public blockchains.
The tax will be in force for three months to see how it affects the market. Whilst trade volumes are now low, officials want to see long-term benefits.
Gift cards used to purchase products or receive a discount, mileage points, reward points, and loyalty rewards without monetary considerations, as well as subscriptions to websites, platforms, or applications, are free from tax.
Muthuswamy Iyer, Head of Legal at WazirX and Chaudhary’s on-air counterpart, correctly predicted. The TDS would significantly affect high-volume, high-value traders on Indian platforms. He also felt that the TDS would deter beginners and low-frequency traders from getting crypto exposure.
In June, the average daily transaction volume between WazirX, Zebpay, BitBNS, and CoinDCX was over $9.6 million daily. Still, by July 4, it had dropped to around $5.6 million.