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The rules regarding TDS on cryptocurrency assets are storming the Indian crypto market. As per the new guidelines, cryptocurrency buyers are required to deduct 1% of the amount paid to the seller as TDS. The tax is required to be deducted at the time of credit of the amount or at the time of payment to the resident individual, whichever is earlier. But the tax is said to be deducted only if the amount paid exceeds the specified limit. These incidences have had intense implications on Indian cryptocurrency businesses. Crypto supporters are protesting against the Indian Government's anti-crypto regulations. Massive amounts of declines in trading volumes across all national crypto exchanges are also discouraging the rest of the investors from investing in digital assets.
Based on reports, trading volumes on Indian exchanges have experienced a reduction of about 90-95% since the government introduced the 30% GST tax law. With the two consecutive taxes emerging in the Indian crypto domain, most investors seemed to be moving to international platforms. A joint survey initiative was undertaken by crypto exchanges WazirZ and ZebPay, which revealed that around 83% of the active cryptocurrency traders have minimized the frequency of their trading activities due to the recent tax implementations. The survey also revealed that more than 23% of the respondents are contemplating shifting their trading activities to international exchanges, given the current circumstances.
This migration will not only hurt Indian crypto businesses but will also inherently hurt the broader cryptocurrency market. Several Indian crypto investors are fleeing the crypto market due to the growing volatility and regulations. But India has one of the fastest cryptocurrency adoption rates, that surpassed several major nations. As crypto investors seem to withdraw away from the market, the total volume of cryptocurrency trading has massively tanked on a global basis.
Currently, Indian investors are eyeing international exchanges to surpass and ignore paying crypto taxes altogether. Indian policymakers believe that these restrictive anti-crypto regulations are a step forward to creating a framework for the decentralized economy of the country, but experts argue that these policies only hinder the growth and development of innovation and definitely do not provide a supportive environment for industry stakeholders.
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