Within the span of four days, the trading volumes on Indian cryptocurrency exchanges took a significant hit, dwindling by as much as 63%. The decrease was caused by the implementation of a 1% tax deducted at source (TDS) imposed on July 1st, 2022.
Dropping Trading volumes
Aggregator nomics shows that the daily trading volume of Indian cryptocurrency exchange WazirX fell by more than 63%, starting at $14.53 million USD on June 30th, and fall to as low as US$5.36 million by July 1st. Similarly, the trading volume on unicorn crypto exchange CoinDCX decreased 20%, slipping from US$2.62 million to US$2.09 million over the same period.
The dwindling trading volumes of India’s major cryptocurrency exchanges has been a noticeable trend since April 1st, when yet another taxation policy kicked in, requiring cryptocurrency traders to pay a 30% flat tax on all crypto-related income.
New Crypto Taxes in India
On July 1st, India imposed a 1% tax on the sale and transfer of crypto assets in excess of 10,000 Indian rupees (or approximately $127 USD). The tax is added on top of the crypto taxation changes set in motion earlier this year.
The new tithe, which went into effect on July 1st is not the end of the woes for traders in the country, as Indian tax authorities also plan to implement a 20% tax on DeFi gains, along with applying the highest 28% rate of goods and services tax on cryptocurrency transactions.
The increasingly hostile regulatory environment reflects India’s resolution to crack down on the crypto market. As reported by Chainanalysis, India had the second largest crypto market share in 2021.
With the government openly restricting crypto accesibility with high taxation policies, as many as 50 Indian crypto and blockchain entrepreneurs have moved their operations out of the country in favor of more crypto-friendly locales, such as Dubai and Singapore. Among the companies to have left India are the WazirX and CoinDCX crypto exchanges.