Since the country imposed a strict tax framework on cryptocurrency transactions, money is exiting the Indian cryptocurrency sector.
From domestic cryptocurrency exchanges to foreign exchanges, the India cryptocurrency sector received more than $3.8 billion in trading cryptocurrencies between February and October 2022.
Due to income tax obligations of up to 30% and a 1% tax on cryptocurrency transactions, Indian cryptocurrency traders may have lost interest and are progressively leaving the game (TDS). Since the tax was established in July 2022, Binance had 429,000 downloads as of September, which is three times greater than CoinDCX exchange. Following four months of divisive tax legislation, domestic markets saw a loss of 81% of trade volume.
When the tax policy was implemented, Nischal Shetty, CEO of WazirX, projected that Indians will "find a way out" of the system within the nation before "massively relocating" to the outside. He had previously viewed 1% TDS as the industry's worst-case scenario.
For the next four years, the government will lose almost $1.2 trillion in domestic trade if the current tax structure is upheld. In addition, the Esya researchers request that authorities lower the TDS, which is comparable to a securities transaction tax, from 1% to 0.1% each transaction. Additionally, they support introducing a progressive tax on gains rather than a flat 30% tax and enabling losses to offset profits.
India needs cash inflows rather than outflows, as it does right now, as its imports are $36.4 billion higher than its exports at an all-time high. The most recent findings would put pressure on the government to stop the use of cryptocurrencies to transfer money abroad, which has increased India's current account deficit.
