Crypto Trading in India Plunges as Government Introduces Tax; Survey shows negative sentiment
The latest income tax rule set by the government regarding cryptocurrencies, which came into force in early July, has dropped sharply for crypto exchanges in India, according to a report. True to their warning, Indian cryptocurrency exchanges are witnessing plummeting volumes on their platforms as investors pull back since the government introduced the new TDS levy rule on cryptocurrencies to regulate these transactions. Under the new rule, the buyer of a virtual digital asset or cryptocurrency must pay 1% withholding tax (TDS) on the amount paid to the seller.
Crypto Trading Goes for a Throw
According to Bloomberg report citing CoinGecko, three major crypto exchanges in India – ZebPay, WazirX and CoinDCX, have seen a 60-87% drop in their daily trade value since the government started levying the TDS from 1 % on cryptos. from July 1. Another exchange, named Giottos, saw its trading fall by 70%, its chief executive said.
It was also fueled by general negativity in trading amid a combination of plummeting prices, pullback difficulties and general depressing sentiment – in a once-booming market.
WazirX, a Binance-backed trading platform, completed $3.8 million in trades on July 2, according to Bloomberg. In early July last year, WazirX traded that amount for less than two hours, according to the report. According to the platform’s Vice President, Rajagopal Menon, while long-term crypto holders are still buying and selling, high-frequency traders and market makers are out of the limelight. “Traders are also doing more peer-to-peer trading and migrating to so-called decentralized exchanges,” Menon said.
Survey indicates negative feelings
According to a survey by WazirX and ZebPay of 9,500 respondents, 83% of merchants believed that the recent implementation of the tax had deterred their trading frequency. “In addition, about 24% of respondents are considering transferring their business activities to international exchanges due to high taxation. Additionally, 29% of respondents traded less than the pre-tax period,” the survey said.
According to the survey, 27% of respondents sold more than 50% of their portfolio before April 1, while 57% sold less than 10%. In the current scenario, revenue from tax collection for the government will decrease, as 27% of customers (34% of traders and 23% of holders) said they would trade less than before due to tax policy current.
During the February budget session, the government introduced a tax regime for virtual digital assets, including cryptocurrencies, which consists of a TDS and another 30% tax on income derived from crypto and other digital assets. While the 30% income tax rule came into effect on April 1, the TDS provision came into effect on July 1 this year.
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