Cryptocurrency Trading Volumes Drop In Indian Exchanges After New Tax Rules

Following the adoption of the new cryptocurrency tax law, the volume of trading on major Indian cryptocurrency exchanges has decreased.

Data compiled by Crebaco, a Mumbai-based research organisation, and Nomics, a cryptocurrency data generator, indicated this.

On April 1, the new tax law went into force. All profits from cryptocurrency trading in the country will be subject to a 30 percent tax, as declared by Finance Minister Nirmala Sitharaman. Furthermore, no deductions, set-offs, or carryovers are permitted.

Indian cryptocurrency users must additionally pay a one percent TDS on each transaction, according to the tax legislation.

According to a report in CoinDesk, the volumes of four Indian exchanges — WazirX, ZebPay, CoinDCX, and BitBns — were compiled using data from CoinMarketCap and Nomics. WazirX was down 72 percent, ZebPay was down 59 percent, CoinDCX was down 52 percent, and BitBns was down 41 percent, according to the statistics.

The report also quoted Crebaco CEO Sidharth Sogani as saying, “It is clear that the new tax has impacted the market negatively.”

Mr Sogani went on to add that April 1, 2, and 3, were all holidays and since then volumes have continued to decline since then. “The government must look into this, and because there is no way to stop this (crypto), the government should embrace the technology,” he said.

Even according to Sathvik Vishwanath, co-founder and CEO of cryptocurrency exchange Unocoin, new tax law is hurting the market. He had tweeted, “People earning less than 10L per year is affected by 30% fixed income tax on crypto. 1% TDS is affecting the market makers and liquidity providers.”

People earning less than 10L per year is affected by 30% fixed income tax on crypto. 1% TDS is affecting the market makers and liquidity providers. Both are needed for better crypto ecosystem in India.#reducecryptotax#faircryptotax Day-68 #IndiaWantsCrypto@Unocoin

— Sathvik Vishwanath (Unocoin) (@sathvikv) April 10, 2022

In another post, he wrote, “While people could start living with 30% income tax eventually, the 1% TDS gonna be a huge pain. Not just about money but also about compliance, deductions, payment to dept and reconciliation.”

While people could start living with 30% income tax eventually, the 1% TDS gonna be a huge pain. Not just about money but also about compliance, deductions, payment to dept and reconciliation. #reducecryptotax#faircryptotax Day-82 #IndiaWantsCrypto@Unocoin

— Sathvik Vishwanath (Unocoin) (@sathvikv) April 24, 2022

Earlier this month, cryptocurrency influencer Aditya Singh, too, shared data showing a drop in volumes in Indian exchanges. “Indian exchanges saw volume drop after new crypto tax rules became applicable on 1st April,” wrote Singh, and also shared a few charts.

Indian Exchanges saw Volume drop after New Crypto tax rules became applicable on 1st April. pic.twitter.com/ay60tR692q

— Aditya Singh (@CryptooAdy) April 2, 2022

For a while now, #ReduceCryptoTax has been trending in India on Twitter.

Exchanges are already facing volume crisis & on top of that payment services are again being stopped.

While the world is competing to become tech leader in crypto adoption, Indian exchanges are struggling to get basic support.#Reducecryptotax

— Aditya Singh (@CryptooAdy) April 18, 2022

#India is ranked second in @chainalysis‘ 2021 Global #Crypto Adoption report. This goes to show our collective excitement about this asset class. Unfortunately, India’s high crypto tax rates will deter people from investing in it. So we must #reducecryptotax. #IndiaWantsCryptopic.twitter.com/0Trymqfm8a

— Bitbro (@bitbrocrypto) April 11, 2022

There have been petitions, too, urging the finance minister to reconsider the tax rules.

According to Chainalysis, India is at No.2 in the “2021 Global Crypto Adoption Index Top 20” table. Vietnam is at the top spot.