- Indians moved over 3.8 billion in trading volume to foreign exchanges.
- They did so in response to the heavy crypto taxes the nation set in place.
- This is pushing a huge number of assets into foreign exchanges instead.
Indians seem to have moved over $3.8 billion in trading volume onto international exchanges from local exchanges. This massive shift is a reaction to the country announcing difficult crypto taxes on its citizens early last year.
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To specify, India announced a tax of around 30% over crypto holdings onto its citizens in February 2021. Since then $3.8 billion was moved from local exchanges to foreign exchanges. More importantly, this is the value moved between February and October of 2021, according to Esya Centre’s report.
In detail, the verdict came on February 1, 2021 during Prime Minister Narendra Modhi’s government ruling. Along with the 30% crypto tax, they also announced a 1% tax deduction at source (TDS). These taxes were applied on all crypto transactions.
Accordingly, India put these taxes into effect only in Q2 of 2021. First, the 30% tax came into play on April 1 while the 1% TDS came into effect on July 1 onwards. The Esya Centre report says local exchanges lost 81% of their trading volume in just four months.
Many thought leaders had a lot to say about India’s new crypto tax laws. After all, India did go back and forth of allowing crypto trading and holding. When they finally did begin to support crypto trades they ended up putting a heavy tax on them.
Therefore, a mixed review came to be heard. On one hand, some expected these laws to kill liquidity. Meanwhile, others encouraged holders to pull out holdings from centralized and local exchanges. This seems to have been the popular opinion considering how much has now been moved to foreign exchanges.
The final verdict in the eyes of these researchers call for a drop in these taxes, lest domestic exchanges face huge losses in the coming years. In particular, they saw the TDS should drop from 1% to 0.1% per transaction. In addition, they say 30% flat tax should be rebuttled for taxes based on gains made.
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