According to bitcoin.com, cryptocurrency volumes in India have dropped new laws to tax digital assets introduced on April 1. Parliament has approved the Finance Bill, which affects the crypto taxation laws announced in the budget.
Aditya Singh, Co-Founder crypto india, said that Indian exchanges saw a drop in volumes after the new crypto tax rules came into force on 1 April. He tweeted volume graphs of four major exchanges where it has seen a significant drop.
Finance Minister Nirmala Sitharaman in her budget speech announced 30% flat tax on crypto income or digital asset investments. Later the government also clarified that investors cannot make up for the loss in one trade against the gain in the other trade.
Along with the capital gains charge, the finance ministry had also announced 1% tax deduction at source or TDS on all digital-asset transfers above a certain size with effect from July 1.
Crypto-exchange executives, lawyers and tax analysts have warned that TDS will suck liquidity out of the market by forcing high-frequency traders to dramatically scale down their trading.
According to Bloomberg, Nischal Shetty, chief executive officer of India’s largest crypto exchange WazirX, called TDS “the worst-case scenario for the industry”.
“There will be no liquidity left in the market,” said Manhar Garegrat, executive director of policy at crypto exchange CoinDCX. “Trades placed by buyers will not be executed as efficiently as they are today, and such inefficiency will eventually weigh down the entire ecosystem.”
Under the new arrangement, the buyer of crypto assets will have to deduct 1% TDS from the seller’s side if the transaction exceeds 10,000. Small trades will also be taxed if they are on a cumulative top 50,000 in a financial year.
If the total amount set aside for TDS during any financial year exceeds their total tax liability for that period, the investors will be entitled to a refund.
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