Cryptocurrency Volumes Dip as New Tax Rules Kick-in

Cryptocurrency volume has dropped down in India depending on the new laws to tax digital assets that kicked in on April 1. The Parliament approved the Finance Bill, which affects the cryptocurrency taxational laws announced in the Budget. 

The co-founder of Crypto India, Aditya Singh has said that the Indian exchanges saw volume drop after new crypto tax rules came into effect on April 1. He also tweeted graphs of the leading crypto exchanges, which showed a significant dip.

In a budget speech, Finance Minister Nirmala Sitharaman announced a flat 30%  tax on crypto income or on any investment in digital assets. The government later also revealed that investors cannot offset losses in one transaction with profits in another.

Crypt-exchange executives, lawyers and tax analysts have given warning that the TDS will take the liquidity out of the market by forcing high-frequency traders to dramatically curtail their trading.

In addition to capital gains charges, the finance minister has announced a 1% tax-deductible at source, or TDS, on all digital-asset transfers above a certain size from July 1.

Under the new rule, if a transaction exceeds Rs 10,000, the buyer of the crypto asset will be required to deduct 1% TDS on behalf of the seller. Small transactions are also taxed if the cumulative amount exceeds Rs 50,000 in a financial year.

Investors will be eligible for a refund if the total amount is set aside for TDS during a financial year exceeds their overall tax liability for the period.