According to data, cryptocurrency trades in India have plummeted after new legislation taxing digital assets went into effect on April 1. The Finance Bill, which implements the cryptocurrency taxation legislation proposed in the Budget, was adopted by House.
According to Aditya Singh, co-founder of Crypto India, traffic on Indian cryptocurrency exchanges dropped when cryptocurrency taxation regulations went into effect on April 1. He shared traffic statistics from four major exchanges, where there has been a big drop.
In her Statement of financial position, Finance Minister Nirmala Sitharaman imposed a 30% flat tax on cryptocurrency earnings or virtual currency acquisitions. Later, the administration emphasized that traders could not balance losses in one deal with gains in another.
Including the capital gains tax, the ministry of finance imposed a 1% tax deducted at source (TDS) on all digital-asset transactions of a specific magnitude beginning July 1.
TDS, according to cryptocurrency exchange executives, attorneys, and tax specialists, would drain liquidity out of the market by drastically increasing traders to drastically reduce their activity.
Nischal Shetty, chief executive officer of crypto wallet, India's largest crypto exchange, dubbed the TDS "the very worst scenario for the sector."
"There will be no liquidity left inside the markets," Manhar Garegrat, executive director of policy at the cryptocurrency exchange, said. "Buyers' trades will not be conducted as effectively as they are now, and such inefficiencies will gradually shrink the entire ecosystem."
If a trade exceeds $10,000, the purchaser of a cryptocurrency commodity must deduct the 1% TDS on behalf of the seller under the new scheme. Smaller trades would also be charged if they exceeded $50,000 in a fiscal year.
If the full amount cast aside for TDS throughout a financial year surpasses the investor's overall tax burden for the year, the shareholder will be entitled to a full refund.