The Indian government made a plan to apply taxes over crypto exchanges so that they could generate revenue out of it and make the country’s wealth better. However, the plan fell upside down as the crypto investors started liquidating their funds into foreign exchanges.
Crypto Assets Converted Into Foreign Exchanges
According to Esya Centre, a technology policy think tank based in Delhi, Nirmala Sitharaman announced 30% TDS on the profit induced from virtual assets. As a result, Indian investors started to liquidate their domestic crypto exchanges into foreign exchanges. This in turn cost a loss of INR 32,000 crore ($3.852billion) in India in just a mere time period of February-October 2022.
Also Read: Crypto Awareness Campaign Commenced by the Indian Government!!
According to Esya’s report, After the application of the 30% tax rule over the assets it was expected to face loss on tax returns and a fall in the amount of transactions traceability. Resulting in, the failure of the cause for which the policy was introduced.
The taxes could result in a loss of around $1.2 trillion in local exchange trade volume over the next four years, a think tank has predicted. An estimated 1.7 million users switched to foreign exchanges during the period studied, according to the study.
https://twitter.com/rohith0808/status/1610888438374625283?s=20&t=9zQ4ye5HqO3QifoOQo_c9A
Vikas Gautam, an adjunct participant at Esya Centre says that National policies are porous in the digital economy hence being internationally competitive is very important. After the proclamation of 30% tax, 1% TDS, and no provision to offset loss, the domestic crypto exchanges have faced 15% loss in trading volumes in February and March 2022.
The Indian VDA exchanges lost 81% of their trading volume in just four months due to 1% TDS implementation. Around 1.7 million investors switched from domestic exchanges to the foreign ones.
Also Read: Crypto Fraudsters Allegedly Exploited Rs. 500 Crore!!