The government’s latest income tax rule in relation to cryptocurrencies, which has been in effect since the beginning of July, has fallen sharply in encryption exchanges in India, according to a report. Consistent with their warning, crypto exchanges in India are seeing lower trading volumes on their platforms as investors hold back since the government implemented new taxation rule. TDS on Cryptocurrencies in order to organize these transactions. Under the new rule, the buyer of a virtual digital asset or cryptocurrency is required to pay a tax of 1 percent to be deducted from the issuer (TDS) of the amount paid to the seller.
Cryptocurrency trading goes to toss
According to a Bloomberg report citing CoinGecko, three leading cryptocurrency exchanges in India – ZebPay, WazirX And CoinDCX, they have seen a drop of 60 to 87 percent in daily trading value since the government started imposing a 1 percent tax on cryptocurrencies from July 1. cent, its CEO was quoted as saying.
This was also driven by general negativity in trading amid a mix of lower prices, withdrawal difficulties, and generally depressing sentiment – in a market that was once high.
WazirX, a trading platform backed by Binance, traded $3.8 million on July 2, according to Bloomberg. In early July last year, WazirX would have been trading that amount for less than two hours, the report said. According to platform vice president Rajagopal Menon, while long-term cryptocurrency holders are still buying and selling, high-frequency traders and market makers are out of the scene. Menon was quoted as saying, “Merchants are also doing more peer-to-peer trading and migrating to the so-called decentralized exchanges.”
Poll indicating negative feelings
According to a survey conducted by WazirX and ZebPay of 9,500 respondents, 83 percent of traders believe that the recent tax implementation has prevented repeat trading. In addition, about 24 percent of survey respondents are considering switching their business activities to international exchanges due to higher taxes. Furthermore, 29 percent of respondents traded for less than the pre-tax period.
According to the survey, 27% of respondents had sold more than 50% of their portfolio before April 1, while 57% had sold less than 10%. In the current scenario, revenue from government tax collection would decrease as 27 percent of customers (34 percent of merchants and 23 percent of shareholders) said they would trade less than previously due to the current tax policy.
During the budget session in February, the government introduced a tax system for virtual digital assets, including cryptocurrency, which consists of TDS and another 30 percent tax on income from cryptocurrencies and other digital assets. While the 30 percent income tax rule came into effect from April 1, the withholding tax ruling became effective from July 1 this year.