Trading volume on three major Indian crypto exchanges has fallen an average of 72.5% since July 1, after a 1% tax was introduced For every transaction in the country.
The withholding tax (TDS) came into effect on July 1, 2022, and appears to have negatively impacted traders with volumes down from 37.4% on BitBNS and 90. 9% on CoinDCX by July 3rd.
Sizes have leveled off a bit since bottoming out but are still down 56.8% on average, according to Quinn Gekko.
India's YouTube channel Crypto India tweeted on Monday that the exchange's returns, based on a 0.1% trading fee, were very poor due to low volume levels. At the lowest volume levels, Xerox, CoinDCX and Zipaye combined commanded $21,649 per day.
Cryptocurrency traders like Shunak Shetty from Mumbai are also being hit. Yesterday, Shetty told the Economic Times that he believed the withholding tax and 30% income tax on cryptocurrency trading in India would hurt the talent base in the South Asian country.
Shetty said: Like other traders, I'm trying to see if it is possible to maintain profit on the Indian stock exchanges. This will lead to another brain drain of professional traders to other more welcoming countries like Dubai.
As Anuj Chaudhry, policy analyst at Wyrex, explained on the June 30 episode of Wyrex's YouTube show, the 1% withholding tax is levied on digital assets. Whether it is non-fungible tokens, crypto assets, metaverses, or any type of transaction that occurs on public blockchains.
The tax will be in effect for a period of three months as a test to determine its impact on the market; While trading volumes are now low, policy makers would like to see their results in a longer time frame.
Gift cards used only to redeem merchandise or to receive a discount, mileage points, reward points, loyalty incentives without financial considerations, and subscriptions to websites, platforms or apps are exempted from tax.
