4 out of 5 traders go slow on cryptocurrency investments after new crypto tax – WazirX
- About 83% of the traders believe that the new tax has deterred their trading frequency.
- About 23 % of the traders want to move their holdings to an international exchange to avail a more favorable tax climate.
- The government of India has imposed a 30% tax on all profit coming from
cryptotrading and an additional 1% TDS on all transactions.
The company’s survey — involving 9,500 respondents — highlighted that 83% of the traders believe that the new tax has deterred their trading frequency. Another 24% — or a quarter of the traders — are considering shifting their trading activities to international exchanges.
The report also indicates that 28% of the respondents aged between 18 and 35 years had sold more than 50% of their holdings before 1st April 2022, when the new tax came into effect. About 23% wished to move their holdings to an international exchange to avail a more favorable tax climate.
Coinbase, Binance and Crypto.com are some of the international crypto exchanges that are likely to gain in case of a switch. Indian crypto exchanges like CoinSwitch Kuber, CoinDCX and WazirX could be at the losing end.
“In the current scenario, revenue from tax collections for the government will decline as 27% of customers (34% traders and 23% holders) said they will trade less than earlier owing to the current taxation policy,” WazirX said in a press note.
₹600 tax for a ₹2000 profit
India’s finance minister Nirmala Sitharaman, in her budget speech in February, announced that all profits from crypto would be taxed at a flat 30% rate, which is the highest tax bracket and the same rate as lottery winnings. The government also mandated a 1% tax deducted at source (TDS) on all crypto transaction redemptions, even the ones that make a loss.
So, for example, a person who buys a crypto asset at ₹10,000 and sells it at ₹12,000 would show a profit of ₹ 2,000 and pay 30% tax, which is ₹600. In terms of TDS, if you had bought Bitcoin worth ₹10,000 and sold it at the same price without any profit, you would get back only ₹9,900.
The new tax was implemented on April 1, 2022.
Rajagopal Menon, vice president at WazirX noted it is important that the regulations support the “inclusive growth” of all stakeholders involved. “The survey results stipulate the need to reform certain conditions to aid the growth of crypto investors in the country, which will result in economic prosperity. The tax regime needs to be balanced to encourage participation and revive trading volumes,” he said.
Meanwhile, the cryptocurrency market is plunging to a new low everyday. Bitcoin, the world’s largest cryptocurrency, is at an 18-month-low of $19,864. The currency reached an all-time high of $68,000 in November 2021.
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