This happens when Indian cryptocurrency traders flee to overseas exchanges to escape the hefty 1% TDS on cryptocurrency transactions. This 1% tax is in addition to the 30% tax on cryptocurrency profits. According to a market research, downloads for the Binance app increased to 429,000 in August 2022.
India's high taxation and difficulty in transferring funds have pushed Indian crypto investors to Binance. Since the 1% tax was implemented in July, daily transaction volumes on the Indian crypto exchanges have dropped by 90%. On the other hand, foreign counterparts of Indian exchanges have been rapidly expanding in India.
This is because exchanges like Binance and FTX have not deducted taxes on crypto transactions. As a result, it is acting as a strong impetus for Indian investors to flee to foreign exchanges.
A spokesperson for Binance stated that the company is actively evaluating the situation and will make future statements as soon as possible.
Binance’s Spat With WazirX
Following an ED investigation, Binance entered into a spat with India's most popular cryptocurrency exchange, WazirX. While WazirX claimed to have Binance's support, the latter has now distanced itself from it. As a result of this customers of WazirX fled to Binance. WazirX's monthly downloads fell from 596k in January to 92k in August.
Furthermore, the suspension of banks' connections with WazirX has resulted in a further drop in fund inflows at the exchange. In addition to Binance, Sam Bankman-Fried's FTX exchange had 96k downloads in July and 52k in August in India. This was up from 40k downloads in January.
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