Indian Crypto Exchanges Succumb to New Tax Rules, Volumes Fall
Since the government levied a 1 percent TDS for dealing in cryptocurrencies, trade volumes at three of India's biggest cryptocurrency exchanges have decreased by more than 60 percent.

Since Friday, trading volumes on Indian cryptocurrency exchanges have decreased by as much as 63 percent due to the implementation of a 1 percent tax deducted at source (TDS).
In India, cryptocurrencies and non-fungible tokens (NFTs) remain unregulated, but as of April, the digital assets are now subject to a 30% income tax. Additionally, the government has declared a 1% TDS for dealing in cryptocurrencies, which will go into effect on July 1.
According to a comprehensive guidance on cryptoassets published by the Central Board of Direct Taxes (CBDT) on June 22, TDS would be applied to cryptocurrency transactions that exceed Rs 10,000 ($126) in a calendar year.
Trading volume falls sharply
Notably, the higher tax rate has resulted in a decline in cryptocurrency trading volumes at Indian exchanges ZebPay, WazirX, and CoinDCX. According to statistics from CoinGecko, since Friday, the three exchanges have seen declines of between 60 and 87 percent.
On Sunday, CoinDCX had a steep loss from $9.9 million to as little as $817,593, while WazirX (WRX), a cryptocurrency exchange supported by Binance (BNB), experienced a decline of more than 63 percent after the announcement on July 1.
Rajagopal Menon, vice president of WazirX, told Bloomberg that although long-term cryptocurrency investors continue to buy and sell, market makers and high-frequency traders have disappeared.
Traders are moving to decentralized exchanges, he said. This is partly because using decentralized exchanges might help you avoid tax consequences because of how they operate. It may not be tenable legally however.
Due to the low trade volumes, the exchange revenues also look startling. A crypto YouTube Chanel in India stated “tough times ahead” owing to the horrible condition.
For the purpose of tax deductions on less well-known cryptocurrencies, the CBDT's rules include four main virtual digital assets (VDAs) or cryptocurrencies: bitcoin (BTC), ether (ETH), USD Tether (USDT), and USD Coin (USDC).
The tax would be in place for three months to examine how it would affect the cryptocurrency market.
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