Indian crypto trading volumes slump following hefty taxes

[FMCPAY_GLOBAL]

Indian crypto traders may be giving up since they must now factor in a 30% income tax and a 1% tax per transaction on crypto trades, forcing exchange volume to plummet.

Indian YouTube channel Crypto India tweeted on July 4 that exchange revenues, based on a 0.1% trading fee, are abysmal due to the low volume levels. At the trough of volume levels, WazirX, CoinDCX, and Zebpay took in a combined $21,649 per day.

The tax will be in effect for three months as a test to determine the impact it has on the market. While trading volumes are low now, policymakers want to see its results for a longer timeframe.

Only gift cards used to obtain goods or get a discount, mileage points, reward points, and loyalty incentives without monetary considerations, and subscriptions to websites, platforms, or applications are exempt from the tax.

(Source: Cointelegraph)

[hugeblack]

Exorbitant taxes will only encourage HODLING coins, avoiding transactions, and trying to circumvent the system. Therefore, I do not think that traders will be highly motivated, but the societal adoption of using services to buy and sell products will be killed.
Also, peer-to-peer trading will decline significantly.

The confusing thing is, does the Indian government have plans or infrastructure to track crypto transactions, or will it rely on data from the platforms?

[ChrisPop]

1% on every transaction is like banning all day-traders. This is definitely not freedom.
IMO governments should give economic agents as much freedom as possible. Taxing the transactions and then the income on top of that is non-sense. Not even talking about the business (exchanges) that get ruined.

[Potato Chips]

But if India's witch-hunt isn't effective enough to deter people from circumventing the taxes, most traders will probably just move to a less likely to be monitored means of buying and selling rather than give up.

Meta: you'll probably get more responses if you move this to legal or exchanges

[vennali]

It has actually deterred a lot of people I know from investing or getting to know more about crypto. Most people wanted to give crypto a try solely as an investment but removing 30% of your profits from it is frankly a lot. Indian crypto adoption has hit a massive roadblock and the resolution is unlikely to take place.

[burugcrypto]

I am from India. Our government doesn't just want people to involve in crypto. If they ban it, there will be huge backlash from the people. So, they first want to distance the people from the crypto. Then they will think of banning it. Master Plan.

[Hamza2424]

From the month of July the Traders are bearing a heavy load of the Taxes as far my knowledge many of my Indian fellows on telegram shifted their work load as by finding alternatives to avoid the taxes. For now its quite under control as Alternatives are working far good for them but there is a breach of security and funds compromisation

[Bitcoin_Arena]

From the month of July the Traders are bearing a heavy load of the Taxes as far my knowledge many of my Indian fellows on telegram shifted their work load as by finding alternatives to avoid the taxes. For now its quite under control as Alternatives are working far good for them but there is a breach of security and funds compromisation

Just wondering, isn't this a case where no KYC noncustodial p2p exchanges like Bisq and Localcryptos come in handy?
I believe such bans and hefty taxes would only spur trading volumes of p2p exchanges, like it was the case with Nigeria when their Government attempted to ban crypto trading.

[Porfirii]

I guess that regulators have to find the balance so many people won't be deterred to trade cryptocurrencies. In my case, since the Spanish legislator proposed that each trade supposes a taxable event as it were a traditional swap, I quitted trading and only hold.

Imagine that at 65k€ I swapped 1 BTC for 15 ETH: at a 25% tax rate I would immediately have a debt of 16.250€; now imagine that the price slumped -you don't have to make a big effort, as it actually happened- and these 15 ETH are worth 1k each: I would have lost all my money, because I would be forced to liquidate all in order to pay taxes, and still have a debt with the tax agency of 1.250€, because of a single trade, which is ridiculous.

I'm sorry for the Indians, I feel identified. I hope regulators find the perfect formula, I'm not 100% against paying taxes, but they must be fair. Otherwise, DeFi and P2P are the only alternatives for many people, I think.

[jrrsparkles]

I guess that regulators have to find the balance so many people won't be deterred to trade cryptocurrencies. In my case, since the Spanish legislator proposed that each trade supposes a taxable event as it were a traditional swap, I quitted trading and only hold.

Imagine that at 65k€ I swapped 1 BTC for 15 ETH: at a 25% tax rate I would immediately have a debt of 16.250€; now imagine that the price slumped -you don't have to make a big effort, as it actually happened- and these 15 ETH are worth 1k each: I would have lost all my money, because I would be forced to liquidate all in order to pay taxes, and still have a debt with the tax agency of 1.250€, because of a single trade, which is ridiculous.

I'm sorry for the Indians, I feel identified. I hope regulators find the perfect formula, I'm not 100% against paying taxes, but they must be fair. Otherwise, DeFi and P2P are the only alternatives for many people, I think.

the point you have mentioned about regulators and that regulators have to find the balance so many people won't be deterred to trade cryptocurrencies. Is a valid point. But that too is true that you have to make your decision if you really have to be successful in the money matter. Better work in silence let the success make some noise.

What you mean by work in silence? Hide the earnings or just keep earning and pay all to the government as taxes and go into the debt!

About the topic, yes the trading activities on exchange seemed reduced a lot and even I saw few threads about wazirx exchange is closing their activity which is basically owned by binance the leader of centralized cryptocurrency exchanges then there is serious problem in their tax policy which had to be sorted ASAP or the black market will evolve and government lose all the revenue.

[Litzki1990]

If the Indian government imposes such a tax on trading then the Indian traders who are there have no way to conduct trading because it is impossible to conduct trading with such a revenue tax. Now I don't understand why the Indian government suddenly took such a decision. Since traders will not trade with such additional tax, they have to think about how to evade trading tax. If it is possible that by enabling vpn traders can avoid such tax system then I would say traders should enable vpn and then conduct their own trading activities.

[thefreethinker]

This is a terrible rule, a harsh one that will in the long run, discourage all enthusiasts from patronizing local centralized exchanges, it will also discourage the growth of local crypto exchanges in the country. Good thing the policy is a test run that will run only for a temporal while, I hope the policy maker sees the general negative effects and consider making the policy far more flexible.

[stompix]

If the Indian government imposes such a tax on trading then the Indian traders who are there have no way to conduct trading because it is impossible to conduct trading with such a revenue tax.

The article and topic are from 2022  , if it were impossible to do business they would have shut down already but as you can see
https://www.coingecko.com/en/exchanges/zebpay
https://www.coingecko.com/en/exchanges/coindcx
https://www.coingecko.com/en/exchanges/wazirx
they are still alive and kicking.

The average daily transaction volume between WazirX, Zebpay, BitBNS and CoinDCX in June was about $9.6 million per day, but that has fallen to about $5.6 million as of Monday

$4,222,777,$1,430,076,$929,996,$388,903
At  ~7 million they seem to have gone over that small dum, not record-breaking but still not that much of a tragedy.

Another example of doomsday press articles that turn to be complete garbage one year later.

[wallet4bitcoin]

The reality of these countries enacting laws bothering on taxes on transactions by its citizens has always seen a decline in certain involvements with an adverse effect of decline in innovation within such nations.

We all understand that the technology has brought about enablement of businesses that has also helped the influx of resources into these nations, I see no reason why laws will also target what seems to be solution just to get resources out of a gradually developing space.

The trading volume decline is not good for india as the nation still has a poverty rate of 14.96%. The taxes should be relaxed.

[KingsDen]

I see no reason why laws will also target what seems to be solution just to get resources out of a gradually developing space.

This is the sad reality. I see no reason a country like India will try to implement this kind of policy. I have come to realise that the only way to get going in the cryptocurrency industry by the government is to handle or regulate cryptocurrency as it concerns your country and not necessarily adopting what other countries do. Indian was supposed to give crypto a soft landing and not the other way round.

The tax will be in effect for three months as a test to determine the impact it has on the market. While trading volumes are low now, policymakers want to see its results for a longer timeframe.

This might indirect mean that some trading firms might purposely want to stay off the market for the period of 3 months in order to keep the trading volume on low still. This is possible and understandable.

[DianeDavoine]

Indian crypto traders may be giving up since they must now factor in a 30% income tax and a 1% tax per transaction on crypto trades, forcing exchange volume to plummet.

Indian YouTube channel Crypto India tweeted on July 4 that exchange revenues, based on a 0.1% trading fee, are abysmal due to the low volume levels. At the trough of volume levels, WazirX, CoinDCX, and Zebpay took in a combined $21,649 per day.


The tax will be in effect for three months as a test to determine the impact it has on the market. While trading volumes are low now, policymakers want to see its results for a longer timeframe.

Only gift cards used to obtain goods or get a discount, mileage points, reward points, and loyalty incentives without monetary considerations, and subscriptions to websites, platforms, or applications are exempt from the tax.