A leading Indian cryptocurrency exchange, Coindcx, is calling for a reduction in the 1% tax on crypto transactions imposed by the government. The exchange argues that the tax, introduced in 2022, has driven trading to overseas platforms, undermining its intended purpose.
Coindcx, a prominent Indian cryptocurrency exchange, has voiced its concerns over the 1% tax deducted at source (TDS) on crypto transactions introduced by the Indian government last year. The tax, intended to monitor transactions rather than generate revenue, has backfired, pushing 95% of Indian crypto trading to international platforms.
Coindcx CEO, Sumit Gupta, emphasized that the tax was meant for tracking and tracing transactions but has proved counterproductive. Market makers have left Indian exchanges due to increased costs, impacting liquidity and trading activity. This has left domestic trading platforms in a state of uncertainty, despite the recent surge in global crypto trading volumes.
The consequences of the tax are evident in Coindcx’s financials. In April 2022, the exchange was valued at $2.15 billion. However, its revenues have since dwindled to a third of the pre-tax era, leading to a 12% reduction in staff. Compliance expenses have also risen due to the application of anti-money laundering regulations.
Despite India’s growing crypto industry, the 1% TDS remains unchanged in the 2023 budget. Gupta expects regulatory clarity after the general election in 2025.