Indian crypto exchange trading volumes fall following 1% TDS implementation

Since Friday, when a 1% transaction tax was implemented in the nation, trading volume on three main Indian crypto exchange platforms has decreased 72.5% on average.

As exchange volumes decreased from 37.4% on BitBNS and 90.9% on CoinDCX by Sunday, it indicates that traders were badly impacted by the Tax Deducted at Source (TDS) that went into force on Friday. Despite a little stabilization from the lows, CoinGecko reports that volumes are still down 56.8%.

Indian crypto exchanges see a major drop

The average daily transaction volume between the Indian crypto exchange platforms WazirX, Zebpay, BitBNS, and CoinDCX was over $9.6 million per day in June, but as of Monday, it had decreased to around $5.6 million.

On Monday, the Indian YouTube channel Crypto India tweeted that low traffic levels are the reason why exchange revenues, calculated using a 0.1 percent trading charge, are horrendously low. WazirX, CoinDCX, and Zebpay brought in a combined $21,649 per day at the lowest volume levels.

Notably, the Indian government has decided to test to see how it affects the market, and therefore, the Tax will be in place for three months. While crypto Tax shows signs of progression, regulators want to see the effects of trading over a longer period of time, despite the current modest trade volumes.

The only items excluded from the Tax are gift cards used to buy products or receive a discount, mileage points, reward points, and loyalty incentives given without purchase, as well as subscriptions to websites, platforms, or applications.

In the June 30 broadcast of The WazirX Show on YouTube, WazirX’s Policy Analyst Anuj Chaudhary noted that the 1% TDS is imposed on “digital assets whether it’s NFT, crypto assets, metaverse or any sort of transactions happening on top of public blockchains.”

Muthuswamy Iyer, head of legal at WazirX, correctly predicted that the TDS would have a negative effect on the high-volume, high-value traders on Indian platforms. He said that the TDS would also deter beginners and low-frequency traders from getting exposure to crypto. 

Notably, as TheCoinRise reported, India imposed a 30% crypto tax recently and planning to develop CBDC by 2022-23.