Indian Exchange Urges Government to Lower Crypto Tax
An Indian cryptocurrency exchange, Coindcx, is calling on the government to reduce the tax burden on crypto transactions. The 1% tax deducted at source (TDS) imposed by authorities in 2022 was intended to track buying and selling rather than generate revenue for the state budget. However, the tax has had the opposite effect, with 95% of Indian trading volumes moving to overseas platforms that are difficult for officials to monitor.
The CEO of Coindcx, Sumit Gupta, stated that the TDS is failing to achieve its purpose of tracking and tracing transactions. Market makers have left Indian exchanges due to higher costs, resulting in reduced liquidity and less trading activity. Meanwhile, Coindcx’s revenues have dropped by a third since the introduction of the tax, leading to staff cuts and increased compliance expenses.
No Relief for Crypto Investors in India’s Budget
In addition to the TDS, crypto profits in India are subject to a 30% tax rate. The country’s budget for 2023 did not introduce any changes or provide tax relief for the crypto industry or investors. Coindcx’s CEO expects more regulatory clarity from the government after next year’s general election.
India Seeks Global Approach to Crypto Regulation
India, as the current G20 presidency holder, has called for a global approach to crypto regulation through international institutions. The government aims to finalize its stance on crypto in the coming months. Despite decreased activity on Indian exchanges, Indians continue to adopt cryptocurrencies through offshore trading and related financial services.
Hot Take: Indian Government Should Reconsider Crypto Taxation
The Indian government’s decision to impose a 1% tax deducted at source (TDS) on crypto transactions has backfired, driving trading volumes to overseas platforms and hindering the growth of domestic exchanges. Coindcx, an Indian cryptocurrency exchange, argues that the TDS is not fulfilling its intended purpose of tracking transactions. Instead, it has led to market makers leaving Indian exchanges, reduced liquidity, and increased compliance expenses for crypto firms. With no relief for crypto investors in the nation’s budget for 2023, it is crucial for the Indian government to reevaluate its approach to crypto taxation in order to support the growth of the industry and prevent further loss of trading activity.
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