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29 March 2024
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Cryptocurrency Transactions Plunge in India After 30% Tax

Since the 30% tax on income from cryptocurrencies in India came into effect on April 1, trading on Indian exchanges has plummeted.

According to data shared by cryptocurrency research firm CREBACO, accessed by the Money Control portal, transaction volumes fell by 55% on India’s main cryptocurrency exchanges in the first two days after the tax took effect. Meanwhile, domain traffic dropped by 40%.

Indian exchanges register a drop in movements

Furthermore, the data showed that between March 31 and April 1, volumes on the WazirX exchange dropped roughly from over 70 million to 40 million.

On CoinDCX, it dropped from 19 million to 12 million. At Zebpay, the volume dropped from 15 million to 4.4 million. Finally, on the Bitbns platform it dropped from 11 million to 96 thousand.

“Volumes have dropped by 10-30% on most Indian cryptocurrency exchanges. People are still understanding what the direct and indirect implications of the new tax rules will be. It may take a few more weeks for people to work on new strategies to reduce the tax burden,” said Sathvik Vishwanath, co-founder of cryptocurrency exchange Unocoin.

As reported by CriptoFácil, on March 25, parliament approved the tax proposed by Finance Minister Nirmala Sitharaman.

In addition to a 30% tax, the government also announced a 1% withholding tax (TDS). This tax will take effect from July 1st.

In addition, the government has determined that it will not be possible to compensate for losses, which makes life even more difficult for investors.

As Minister Sitharaman highlighted, the government is taxing cryptocurrencies because people are making money from it. Still, she said that TDS works as a tracking strategy and is not an additional or new tax.

Drop surprises, but it may be too early for conclusions

Although expected, the sharp drop surprised the market:

“We did not expect volumes to drop so significantly. But it will definitely constrain the industry rather than grow it,” said Sidharth Sogani, founder of CREBACO. “Usually the government puts a high tax on something new. But, little by little, it goes down. But cryptocurrency is a global phenomenon and the repercussions will be much greater.”

However, for Nischal Shetty, co-founder of WazirX, it is still too early to consider this drop as an effect of recent changes.

“We will have some idea by the second or third week of April on whether cryptocurrency taxes will affect the industry or if people will still trade and not worry too much about the changes.”

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