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. Volumes dropped by as much as 80% at some major crypto exchanges.
India: Crypto trading volumes fall
Since July 1, the TDS (tax deducted directly at source) has had a dramatic impact on trading volumes in India’s crypto exchanges.
According to data from Crebaco, trading volume on Indian crypto exchanges Wazirx (Coindcx), Zebpay and Bitbns dropped by approximately 83%, 70% and 76% respectively between Thursday and Sunday.
Now in force is the controversial 1% TDS for crypto transactions above 10,000 rupees. TDS will be in place of the 30 percent gains tax that was introduced in April for crypto transactions exceeding 10,000 rupees.
Sidharth Sogani (Crebaco founder) stated that significant drops in crypto trading volumes were due to changes in global sentiments. He also noted that liquidity providers in India have pulled back.
Sumit Gupta, CEO of Coindcx, warned:
Trading frequency will drop with a 1% TDS in 7 months. In the meantime, volumes will drop in 10 months.
Some traders have confusion about the application of the 1% TDS to foreign crypto exchanges. Wazirx founder Nischal Shetty clarified:
Some people have misinformed others that foreign currency trading does not attract TDS. This is false.
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.
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