Cryptocurrency trading is taking a different pattern and shape in India due to the implementation of tax laws. As a result, traders are experiencing a different turn in their transactions lately in the country. The new rule in India to tax 1% on every transaction is applicable from July 1. Also, the government has a 30% taxation rule on cryptocurrency income for traders, investors and other participants in the field.
After that, the volume of trading fell drastically compared to the law in force. On average, India’s three prominent crypto exchanges have seen a 72.5% drop since the tax was introduced.
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India has introduced Tax Deducted at Source (TDS) from July 1, creating a negative outlook for traders. This has led to a decline in the overall volume of crypto trading in the country, as witnessed by most exchanges. According to reports, the July 3 record shows that CoinDCX had a 90.0% drop in trading volume. At BitBNS, the drop was around 37.4%.
Data from CoinGecko revealed a slight stability in volumes after falling to lows. However, the average record shows a 56.8% drop in volumes.
Top crypto traders are currently on the verge of riding the recent developments in the Indian crypto market. One of the traders, Shounak Shetty from Mumbai, gave his opinion on the new 30% income tax and TDS.
Shetty said on July 4 that such rules would damage the country’s visionary talent. Shetty mentioned that he is now seriously considering the profitability of holding an Indian stock exchange. To him, other places like Dubai seem more attractive and suitable for bigger gains.
Crypto exchanges record a drastic drop in revenue
Low trading volume has drastically reduced the total revenue generated for Indian stock exchanges. On July 4, Crypto India, the country’s YouTube channel, tweeted that with a trading fee of 0.1%, most exchanges could only generate small revenues. The combined daily funds for Zebpay, WazirX and CoinDCX are $21,649 as volume levels reach their lowest values.
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Some leading exchanges like WarizX, CoinDCX, BitBNS and Zebpay have experienced a drop in average daily transaction volume. As of July 4, the value is $5.6 million compared to June’s value of $9.6 million.
In an explanation, Anuj Chaudhary, policy analyst at WazirX, stated that the TDS of 1% covers all virtual assets. Chaudhary gave his explanation on YouTube during the WazirX Show for the June 30 episode. Said assets include cryptocurrencies, NFTs, metaverse or other transactions made on public blockchains.
However, there are a few exceptions to the tax. These include gift cards for discounts or merchandise, reward points and mileage points. Others are cards for subscriptions to websites, apps, platforms and incentives without monetary considerations.
Featured image from Pexels, chart from TradingView.com