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India’s Crypto Trading Volume Plummets as New Tax Rules Enter Into Force

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India’s Crypto Trading Volume Plummets as New Tax Rules Enter Into Force

The volume of crypto trading in India has plummeted since the tax reform law.

The new regulations impose an annual tax of 30% on cryptocurrency income and prohibit loss to offset gains.

New tax regulations for crypto came into effect on April 1, after the country’s parliament approved Finance Bill 2022.

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A tax rate of 30% is now applied to the crypto earnings, but no deductions or offsets for loss are permitted.

On April 1, crypto exchanges in India began seeing sharp declines in trading volumes.

Aditya Singh, the owner of the YouTube channel “Crypto India,” shared images on Twitter that show a dramatic drop in trading volumes at four of the significant currency exchanges within India: Coindcx, Bitbns, Zebpay, and Wazirx.

“This is just the start of the decline of such a great ecosystem that we had in India,” Shivam Chhuneja, a Twitter user, said.

“Our government needs to look at taxation rules that will help the industry and their tax revenues while at the same time. Many earn their livelihoods through crypto trading.”

The finance ministry of India explained in Lok Sabha, the lower house of the parliament, last week the fact that “no deduction in respect of any expenditure (other than the cost of acquisition) or allowance is allowed.

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India's Crypto Trading Volume Plummets as New Tax Rules Enter Into Force

India’s Crypto Trading Volume Plummets as New Tax Rules Enter Into Force

” In addition, a loss incurred due to cryptocurrency transactions cannot be compensated against the gains.

Ashish Singhal, Co-founder and CEO of cryptocurrency trading platform Coinswitch, said:

A flat 30% tax that does not differentiate short-term capital gains from long-term gains, with no provision for deducting expenses incurred or offsetting losses is not in tune with the tax framework for other asset classes and is discriminatory.

Crypto-friendly citizens in India have filed a petition on to ask the government to establish sensible crypto tax policies. This petition has gathered more than 103K people to sign it as of the writing time.

July 1 marks the day that a new hostile tax policy will go into force. A tax deduction of 1% at the source (TDS) could be levied on transactions in crypto. An Indian legislator recently stated why this would be harmful to the cryptocurrency business.

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