The year 2022 has been a roller-coaster ride for crypto investors and holders in India. The beginning of the new financial year in April brought into place two slabs of taxation that have reportedly brought down trading transactions.
Binance’s CZ recently described the overall crypto environment as not a “very crypto-friendly environment” at a conference organized by TechCrunch. Binance was recently in a controversy with its buying agreement with Indian crypto trading exchange WazirX.
TechCrunch has also reported on the impact of the 30% plus 1% TDS tax on cryptocurrency transactions in India. Quoting unnamed sources, it said the processing volume at WazirX declined from its peak of $500 million a day last year to below $5 million this year. However, it seems unreasonable to compare a figure of a time when the entire crypto market was at its all time high (with BTC above $60K) to a figure impacted severely by heavy tax rules.
Yet another blow to the progress of the crypto market was the debacle of Coinbase’s venture in India that wanted to incorporate UPI payments in the India operations. This happened within four days of the app’s launch. The UPI mode had to be disabled by the exchange, nor was there any other working mode of payment as per a media report. Although the exchange had been testing UPI payment mode weeks before the launch, it appears this wasn’t something that the National Payments Corporation of India had approved or seemed to be aware of, as it made clear in a subsequent statement.
CZ or Zhao’s view on the tax points to how it throws a spanner in the typical investment plans of traders who do day trading. As per CZ, a 1% tax on every transaction will make the volumes dwindle, and anyone doing dozens or more of trades a day could end up paying a substantial share of money in tax.
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