Will 1% TDS affect crypto trading volumes? Further fall likely, exchanges suggest
Several factors – inflation, rising interest rates, volatility and more have led to a fall in the crypto markets; to add to this trading volumes could have taken a further decline with the implementation of 1 percent TDS, which took effect from 1 July. Could it sink further? Exchanges indicate that there is such a possibility.
According to data compiled by Nomics, an aggregator for crypto exchange data, trading volumes across the major KYC-compliant Indian crypto exchanges, WazirX and ZebPay, have crashed since 1 July. Furthermore, according to Nomics’ data, the trading volume of CoinDCX crashed significantly after July 1.
Last week, when Business Today contacted the stock exchange for a comment on the same, Minal Thukral, Executive Vice President (Growth and Strategy) at CoinDCX crypto exchange said that the decline may not necessarily be a result of TDS, but can also be attributed to the weekend.
He said: ‘The lower volume can also be attributed to weekends, which have been a trend in crypto.’
Trading volumes remained consistently low throughout the past week, as observed from the graph below.
Similar trends were observed during the analysis of trading volumes of the WazirX exchange.
Rajagopal Menon, vice president of WazirX, told Business Today that the decline may be a result of a general decline in retail interest. He also noted that TDS may further lead to a drop in trading volume in the time to come.
He said: “There has been a drop in trading across the industry as investors shift to hold, and there may be a further decline as traders see their capital locked up while trading on KYC-compliant Indian stock exchanges.”
Trading volumes on ZebPay also witnessed a sharp fall.
A 1 percent TDS on cryptocurrency transfers was announced by Finance Minister Nirmala Sitharaman in the latest Union budget, and it came into force on Friday 1. July.
The Finance Bill 2022 added a new clause called 194S to the Income Tax Act of 1961. It states that on every sale order of cryptocurrencies, 1 percent of the transaction amount will be deducted as tax deduction at source (TDS). The crypto exchanges are obliged to deduct this amount and deposit it with the Tax Department, which the seller can set off later.
Read also: Crypto markets flatline; Bitcoin is stuck at $ 20,000 – BusinessToday
Also read: Crypto Market Weekly Wrap: Latest from the world of cryptocurrency – BusinessToday
