India, the largest democracy in the world, has decided to keep its crypto tax policies the same in its most recent budget. The Indian government declared in April 2018 that it would impose a tax of 30% on cryptocurrency profits. Additionally, it levied a tax deducted at source (TDS) of 1% on all transactions involving crypto-assets.
It was only a short time before the regulation caused a setback for the crypto currency business. During the presentation of the government's budget for 2023, it was widely anticipated that they would announce a reduction in tax rates.
On the other hand, when Finance Minister Nirmala Sitharaman delivered the budget for the country, nothing even quite similar occurred. During her talk, Sitharaman did not discuss crypto currencies, virtual digital assets, blockchain technology, or digital currencies issued by central banks (central bank digital currency).
Indian Crypto Exchanges Under Tremendous Pressure
There was a shift of up to $3.8 billion worth of crypto trading activity from local exchanges to international platforms between February and October 2022, according to research published (1) by an Indian think group called Esya.
On the other hand, local exchanges such as CoinSwitch, CoinDCX, and WazirX saw an 81% decline in their trading volume over four months from July and October.
While the tax on crypto currency earnings is equivalent to the tax levied on winnings from online casinos, many people think that the TDS is the more significant financial burden.
A crypto expert named Ajeet Khurana believes that people are forced by the legislation to trade on foreign exchange markets that won't impose TDS.
Transactions are not the only things that this has impacted. The number of downloads and search terms volumes have also decreased, which points to a diminishing interest in the crypto currency business on the part of Indians.
The Bharat Web3 group, representing the Indian crypto currency business, is certain that there is still a chance for success despite the recent losses. The group believes that lowering the TDS to 0.01%, with a cap of 0.1%, will be sufficient to buck the trend.
India to Use Its G20 Presidency to Influence Crypto Stance in the Indian Subcontinent?
At this time, there are concerns that India may exploit its role as the presidency of the G20 to further its campaign against the bitcoin business.
Already, the Minister of Finance has mentioned that the Indian President places a high premium on the regulation of crypto asset markets. However, judging by the country's tone, it seems unlikely that anything constructive will come out of the discussion.
For instance, the nation's central bank has been a consistent proponent of legislation outlawing the use of crypto currencies. Additionally, the crypto sector has been criticized by the government for not taking sufficient steps to mitigate the dangers involved with the technology adequately.
Whatever the circumstances, the crypto currency business in India needs to be prepared for everything that may arise.