Crypto Trading Volumes on Indian Exchanges Dips as TDS Comes into Force

Crypto Trading Volumes on Indian Exchanges Dips as TDS Comes into Force

Cryptocurrency trading volumes across exchanges in India have plunged after the country’s 1% tax deducted at source (TDS) became effective from the beginning of the month. Some major crypto exchanges saw volumes dip by about 80%.

Crypto Trading Volumes in India Fall

The trading volumes across crypto exchanges in India have fallen sharply after the new TDS (tax deducted at source) became effective on July 1.

Trading volumes on major Indian crypto exchanges Wazirx, Coindcx, Zebpay, and Bitbns plunged about 83%, 70%, 76%, and over 18%, respectively, from Thursday to Sunday, the Mint reported on Monday. The data has been collated from the research firm Crebaco.

The controversial 1% TDS on crypto transactions exceeding 10,000 rupees is now effective. The TDS is in addition to the 30% capital gains tax on crypto, which has been effective since April.

The founder of Crebaco, Sidharth Sogani pointed out that the significant dip in crypto trading volumes is also due to the global financial market sentiments. In addition, liquidity providers have backed out of India, he noted.

Coindcx CEO Sumit Gupta has warned:

"With 1% TDS, trading frequency is likely to drop in just 7 months. And volumes are expected to go down in 10 months."

Some traders are confused about whether the 1% TDS applies when using foreign cryptocurrency exchanges. Wazirx founder Nischal Shetty clarified:

"There has been misinformation spread by some that trading on a foreign exchange does not attract TDS. That is incorrect."

He explained that using exchanges that do not deduct TDS means traders are responsible for paying TDS directly to the country’s Income Tax Department.

"Please be aware of this as you will end up having a huge TDS amount pending for payment if you trade on foreign exchanges and do not pay TDS," the executive cautioned.