Trading volume on India’s three biggest crypto exchanges has fallen by an average of 72.5% since July 1, as a 1% tax per trade was enforced in the country.
The Tax Deducted at Source (TDS) came to effect on July 1 and negatively impacting traders as exchange volumes dropped from 37.4% on BitBNS and 90.9% on CoinDCX on July 3. Volume has stabilized a bit since hitting a low but is still down 56.8% on average, according to CoinGecko.
Crypto India, an Indian YouTube channel, tweeted on July 4 that the exchange revenues, based on a 0.1% transaction fee, are abysmal due to the low volume level. At the bottom of the volume, WazirX, CoinDCX, and Zebpay gained a total of $21,649 per day.
Cryptocurrency traders like Mumbai’s Shounak Shetty are also affected. Shetty told the Economic Times on July 4 that the TDS and 30% income tax on crypto trading in India would be detrimental to the talent base in the South Asian country. He said:
“Like other traders, I am trying to figure out if it’s possible to stay profitable on Indian exchanges. This will lead to another brain drain of professional traders to other countries like Dubai that are more welcoming.”
WazirX’s policy analyst, Anuj Chaudhary, explained on the June 30 episode of the WazirX Show on YouTube that 1% TDS is hit on “digital assets whether it’s NFT, crypto assets, metaverse, or any sort of transactions happening on top of public blockchains.”
The tax will be legible for three months as a test to determine its impact on the market. While trading volume is currently low, policymakers want to see its results in a longer timeframe.
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