Indian crypto traders will likely give up as they are now subject to 30% income tax and 1% per transaction tax on crypto transactions, forcing a sharp drop in exchange volumes.
Trading volume on India’s three major crypto exchanges has dropped by an average of 72.5% since July 1, when a 1% tax per trade was enforced in the country.
Tax Deducted at Source (TDS) went into effect on July 1 and appears to have negatively impacted traders as exchange volumes dropped from 37.4% on BitBNS and 90.9% on CoinDCX on July 3. Volume has stabilized a bit since hitting the low but is still down 56.8% on average, according to CoinGecko.
The Indian YouTube channel Crypto India tweeted on July 4 that the exchange revenue, based on a 0.1% transaction fee, is very low due to the low volume. At the bottom of the volume, WazirX, CoinDCX, and Zebpay raked in a total of $21,649 per day.
Currently, crypto traders like Mumbai’s Shounak Shetty are also hurting. Shetty told the Economic Times on July 4 that he believes the TDS and 30% income tax on crypto trading in India will be detrimental to the talent base in the South Asian country. He told:
“Like other traders, I am trying to figure out if it’s possible to stay profitable on Indian exchanges. 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 of the WazirX Show on YouTube that 1% TDS is hit on “digital assets whether it’s NFTs, crypto assets, metaverse or any kind of transaction taking place on public blockchains.”
The tax will be in effect for three months as a test to determine its impact on the market. While trading volume is currently low, policymakers want to see its results over a longer time frame.
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