India’s crypto industry has been “crippled” in 2022 under the country’s controversial tax laws.
according to a new report good Indian crypto investors have moved $3.852 billion (INR 32,000 crore) worth of digital assets from local to international crypto exchanges since February last year, when the nation announced a 30% tax, according to Delhi-based technology policy think tank Esya Center. . Income from cryptocurrency.
“Of this, a cumulative amount of $3,055 million was offshored within six months of the current financial year,” the report said, adding that “an estimated 1.7 million users switched” from domestic crypto exchanges to foreign counterparts.
As stated, the Government of India Unveiled Announcing its crypto tax plan in early 2021, tax benefits from crypto transfers at a rate of 30%. The country also unveiled 1% Tax Deducted at Source (TDS) on all crypto transaction redemptions.
Initially, the news was met with optimism as many industry veterans noted that the new laws would remove any ambiguity regarding crypto assets for banks and other financial institutions, allowing them to provide financial services to the crypto industry.
However, a report by Esya Center now claims that India’s virtual digital asset (VDA) industry is “crippled under the current tax architecture”. It claimed that all Indian crypto users would move to foreign exchanges under the current structure.
Experts have noted that the 1% levy has hurt crypto liquidity in India as it forces high-frequency traders to dramatically reduce their trading to reduce taxes. The report states that domestic exchanges lost 81% of their trading volumes in the four months after the much-touted 1% TDS rule was implemented. Added this:
“We anticipate an equally large negative impact on tax revenue, as well as a reduction in the traceability of transactions – which defeat two central goals of the current policy structure. The current tax structure will result in approximately $1.2 billion in local exchange trade.” There could be a loss of trillion. quantity in the next four years.”
The think tank suggested that the Indian authorities change the TDS from 1% per transaction to 0.1%, making it equivalent to the securities transaction tax. He also recommended a progressive tax on profits instead of a flat 30% tax.
India fourth place in crypto adoption on Chainalysis’s 2022 Global Crypto Adoption Index, with a whopping $172 billion in cryptocurrency transactions between July 2021 and June 2022. The country has also seen increase investor interest among its growing Web3 ecosystem.
India has long maintained a harsh stance towards cryptocurrencies, claiming that the nascent asset class has no inherent value. Just last month, Reserve Bank of India (RBI) Governor Shaktikanta Das had demanded from the country ban cryptocurrencies completely,
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