Crypto tax rule causes Indian investors to lose interest as trading activity plummets: survey
Crypto trading is witnessing a drop in frequency due to cryptocurrency tax schemes designed by the Indian government for digital assets, a survey has found. Involving nearly 10,000 respondents, the survey was conducted by WazirX and Zebpay, two of the country’s largest crypto exchanges.
The platforms collaborated to launch a Trader Sentiment Survey, which only included traders who actively traded from the start of 2022 through April 15. The survey revealed that up to 83% of total respondents experienced a disruption in their business activity.
Nearly a quarter of all respondents plan to shift their trading to international trading. Twenty-nine percent of the total respondents said that their business activity has decreased since the government introduced the new cryptocurrency tax implementation system.
The Ministry of Finance has decided that all virtual digital assets sold for profit will be subject to a 30% tax, starting April 1. The decision was announced by Finance Minister Nirmala Sitharaman, during the speech on the Union budget. The survey shows that 27% of traders sold more than 50% of their crypto portfolio before April 1.
The survey also suggested that, in line with the current trend, the government will lose revenue from collecting taxes on crypto assets as 27% of total respondents said they would trade less than the pre-tax period due of the new tax policy. The most affected among the traders were people belonging to the age group of 18-35 years.
The survey “clarifies the need to reform certain conditions” so that tax regulations support the inclusive growth of traders and holders in the crypto market, Rajagopal Menon, vice president of WazirX, said in a statement. “The tax regime needs to be balanced to encourage participation and boost trading volumes,” he added.
Avinash Shekhar, CEO of Zebpay, said: “The results indicate that a considerable number of respondents intend to reduce their trading frequency and their participation in the category.” Shekhar said restrictive policies serve as “a barrier to both adoption and innovation.” He said, “Crypto is driving revolutionary change across the world and it is in our nation’s interest to encourage, not deter, participation.”
According to media reports, the government is also considering levying a 28% GST on crypto activities such as selling-buying, cryptocurrency mining, and services provided by crypto exchanges.
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