Indian crypto brokers may be giving up since they must now factor in a 30% income tax and a 1% tax per transaction on crypto trades, forcing exchange volume to fall.
Trading volume on three major Indian crypto exchanges has fallen 72.5% on average since July 1, as soon as a 1% tax per transaction was imposed in the country.
CoinGecko reported the Tax Deducted at Source (TDS) came into effect on July 1 and appears to have negatively affected traders as exchange volumes dropped from 37.4% on BitBNS and 90.9% on CoinDCX by July 3. Volumes have steadied slightly since hitting lows but are still down 56.8% on average.
Indian YouTube channel Crypto India tweeted on July 4 that exchange revenues, based on a 0.1% trading fee, are awful due to the low volume levels. At the trough of volume levels, WazirX, CoinDCX, and Zebpay took in a combined $21,649 per day.
For present-day, crypto traders like Mumbai’s Shounak Shetty are also hurting. Shetty narrates Economic Times on July 4 that he believes the TDS and the 30% income tax on cryptocurrency trades in India will be unfavorable to the talent base in the South Asian nation.
WazirX’s Policy Analyst Anuj Chaudhary clarified in the June 30 episode of The WazirX Show on YouTube that the 1% TDS is levied on “digital assets whether it’s NFT, crypto assets, metaverse, or any sort of transactions happening on top of public blockchains.”
The tax will be in effect for three months as a test to fix the effect it has on the market. While trading volumes are low now, policymakers want to see its results for a longer timeframe.
Only gift cards are used to obtain goods or get a discount, mileage points, reward points, and loyalty incentives without monetary considerations, and subscriptions to websites, platforms, or applications are released from the tax.
Chaudhary’s equal on the show, Muthuswamy Iyer, Head of Legal at WazirX, precisely forecast that the TDS would negatively impact the high volume, high-value traders on Indian platforms. He added that he believes the TDS would also discourage newcomers and low-frequency traders from gaining crypto exposure.
The average daily transaction volume between WazirX, Zebpay, BitBNS, and CoinDCX in June was about $9.6 million per day, but as of July 4, that has fallen to about $5.6 million.
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