After India’s 1% tax deducted from the source (TDS), cryptocurrency trading volumes have plummeted across Indian exchanges. Volumes dropped by 80 %. at some major crypto exchanges
After the July 1st implementation of TDS (tax deducted from source), trading volumes on Indian crypto exchanges have dropped sharply.
The trading volumes of major Indian crypto exchanges Wazirx and Coindcx plunged by about 83%, 70% and 76% respectively from Thursday through Sunday, according to Mint, citing data from Crebaco.
Now in effect is the controversial 1% TDS for crypto transactions exceeding 10,000 Rupees. This TDS is in addition the 30% gains tax that crypto transactions exceeding 10,000 rupees were subject to in April.
Sidharth Sogani, founder of Crebaco, stated to the publication that the significant drop in crypto trading volumes was also due to global financial market sentiments. He also noted that liquidity providers in India have pulled back.
Sumit Gupta, CEO of Coindcx, warned:
Trading frequency will drop with 1% TDS in 7 months. Volumes are also expected to decrease in the next 10 months.
Some traders are unsure if the 1% TDS applies to foreign cryptocurrency 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 traders who use exchanges that don’t deduct TDS must pay TDS directly to the Income Tax Department of the country.
The executive warned that if you trade in foreign currencies and don’t pay TDS, you could end up with a large TDS amount pending payment.