A total of Rs 32,000 crore, about $3.8 billion in trade volume was transferred from Indian crypto exchanges to international exchanges between February and October as a result of the Budget 2022’s proposal of a 30% tax on the income from crypto assets.
The “Virtual Digital Asset Tax Architecture in India” report, published by the Esya Centre, predicts that the existing tax structure could result in a loss of local exchange transaction volume of almost Rs 99.3 lakh crores ($1.2 trillion) over the following four years.
The report curated by Dr. Vikash Gautam noted that it is crucial for the government to compile concrete data on the ideal tax rate for the cryptocurrency sector.
The report states “60.8 percent of the fall in the volumes of Indian centralized VDA exchanges are due to domestic market conditions (i.e. VDA tax architecture in India during Feb-Oct 2022) and the conditions intrinsic to these exchanges,” it added.
India-based centralized crypto exchanges saw a 15% loss in trade volume in February and March 2022. They lost another 14% between April and June, and between July and October, they lost 81% of all trade volume.
Research shows that India’s crypto traffic decreased as a result of the government’s implementation of its crypto tax policy, but this analysis goes further in stating that, should the current situation persist, centralized exchange firms will become unviable in India.
Also Read: Indian Parliament Passed Finance Bill Charging 30% Crypto Tax
The researchers propose that TDS be reduced from 1% per transaction to 0.1%, which would be comparable to the securities transaction tax and allow losses to be taken off, as an alternative to the current tax system.
The report also suggested using progressive gains taxes rather than a flat 30% tax rate. The trading volume on WazirX decreased by 63% the day after TDS was implemented. Since the taxes were imposed, their trading volume has reportedly decreased by 90%.
The trading volume on WazirX decreased by 63% the day after TDS was implemented. Since the taxes were imposed, their trading volume has reportedly decreased by 90%.
Also Read: Binance CEO CZ Fears India’s Crypto Tax will Kill the Industry
