Key Takeaways
- Since July 1, WazirX, and CoinDCX, have witnessed their trading volumes slashed by at least 80%.
- According to crypto India, based on current volumes – India’s major Exchanges are able to generate trading fee revenue of only $1000-$3000 maximum
- The TDS rules, which came into effect on July 1 state that all trades involving the sale/ transfer of crypto assets will be charged a 1% on the seller’s end.
Ever since The Tax Deducted at Source(TDS) rules came into force on July 1, crypto trading volumes in India have plummeted. Trading volume on three major Indian crypto exchanges plummeted 72.5% on average since the introduction of new taxes.
According to the new TDS laws, all trades involving the sale/ transfer of crypto assets will be charged a 1% on the seller’s end. Since July 1, WazirX, and CoinDCX, saw their trading volumes slashed by at least 80%. WazirX witnessed trading volumes fall 63.11%, from $14.53 million on June 30, 2022, to $5.36 million on July 1, 2022. Since July 1, the exchange has lost 80.11% as the trading volume currently stands around $2.9 million.
According to crypto India, based on current volumes – India’s major Exchanges can only generate trading fee revenue of $1000 to $3000 Maximum. The average daily transaction volume between Zebpay, BitBNS, WazirX, and CoinDCX in June was around $9.6 million per day, but it has fallen to nearly $5.6 million as of July 4.
Indian exchanges have long anticipated the effect TDS would have on the market. Many financial analysts have also predicted that exchange revenues will be low owing to reduced trading volume levels caused by new tax rules. Muthuswamy Iyer, Head of Legal at WazirX, had earlier stated that TDS would negatively impact the high volume, high-value traders on Indian exchanges. According to Iyer, TDS would dissuade newcomers and low-frequency traders from gaining crypto exposure.
In order to soften the blow of the new tax, CoinDCX even started seeing diminishing volumes on June 29, 2022. The exchange shed 64.64% in trading volume, slipping from $7.41 million to $2.62 million between 29th and June 30, 2022.
The Indian crypto industry, already hammered by market volatility, is now trying to navigate its way through the new tax rules. Policymakers are expected to keep the new tax rules for a longer time frame to witness their impact on the crypto economy.
