• India introduced new taxes of 30% capital gains tax and 1% transaction tax as TDS on crypto transactions in April 1, 2022.
• This has caused a significant portion of the trading volume to move overseas.
• A new study has quantified the value of cumulative trading that shifted from Indian to foreign crypto exchanges after the taxes kicked in, at $3.8 billion.
In April 1, 2022, the Indian government introduced two new taxes on crypto transactions – a 30% capital gains tax and a 1% transaction tax as TDS. These taxes were implemented to regulate the sector, but it has had significantly negative impacts on the Indian exchanges.
With the new taxes in place, Indian exchanges have seen their trading volumes decrease drastically, with most estimates quoting losses of more than 90% compared to the previous year. This has led to a huge shift of trading overseas, as Indian traders flock to foreign exchanges where the regulations are not as tight.
Now, a new study has quantified the value of cumulative trading that has shifted from Indian to foreign crypto exchanges since the new taxes kicked in. The study, conducted by CryptoPotato, estimated that the total value of trading volumes moved overseas since the taxes were implemented was approximately $3.8 billion. This is a staggering figure, and demonstrates just how much of an impact the taxes have had on the Indian crypto industry.
The study also noted that the tax rates were very high, and that the Indian government should consider reducing the rates in order to make the market more attractive to investors. Many other countries, such as Singapore and the United States, have much lower taxes on crypto transactions, so the Indian government could consider revising the taxes in order to make sure the Indian crypto market remains competitive.
Overall, the study showed that the introduction of the new taxes on crypto transactions in India has had a huge impact on the industry. It has caused a significant portion of the trading volume to move overseas, with an estimated cumulative value of $3.8 billion. It remains to be seen whether or not the Indian government will reduce the tax rates in order to make the market more attractive to investors, but it is clear that the current situation is not sustainable in the long run.