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Cryptocurrency trading volumes across exchanges in India have plunged after the country’s 1% tax deducted at source (TDS) went into effect at the beginning of the month. Some major crypto exchanges saw volumes dropping by about 80%.
The trading volumes across crypto exchanges in India have fallen sharply after the new TDS (tax deducted at source) went into effect on July 1.
Trading volumes on major Indian crypto exchanges Wazirx, Coindcx, Zebpay, and Bitbns plunged about 83%, 70%, 76%, and over 18%, respectively, from Thursday to Sunday, the Mint reported Monday, citing data from research firm Crebaco.
The controversial 1% TDS on crypto transactions exceeding 10,000 rupees is now in effect. The TDS is in addition to the 30% gains tax on crypto which went into effect in April.
Crebaco founder Sidharth Sogani told the publication that the substantial drops in crypto trading volumes also resulted from the global financial market sentiments. In addition, liquidity providers have backed out in India, he noted.
Coindcx CEO Sumit Gupta warned:
With 1% TDS, trading frequency is likely to drop in just 7 months. And volumes are expected to go down in 10 months.
Some traders are confused about whether the 1% TDS applies when using foreign cryptocurrency exchanges. Wazirx founder Nischal Shetty clarified:
There has been misinformation spread by some that trading on foreign exchange does not attract TDS. That is incorrect.
He explained that using exchanges that do not deduct TDS means traders are responsible for paying TDS directly to the country’s Income Tax Department.
“Please be aware of this as you will end up having a huge TDS amount pending for payment if you trade on foreign exchanges and do not pay TDS,” the executive cautioned.
