Indian Crypto Exchange Urges Government To Lower Taxes To Increase Trade Volume

Crypto taxes are too high, crypto exchanges in India protest. (Photo; Doc. Coincroco)

JAKARTA One of India's local crypto exchanges, Coindcx, urged the Government of India to lower taxes on crypto transactions. This tax, imposed last year, of 1% cut from its source (TDS), is considered not to have achieved its predetermined goals, and is actually pushing India's crypto trading volume to foreign platforms that Indian authorities are difficult to monitor.

The tax was originally applied with the aim of tracking crypto purchases and sales rather than to increase state revenues. However, according to Coindcx, this levy has become counterproductive.

Coindcx CEO, Sumit Gupta, explained that the tax has pushed 95% of India's crypto trading volume into overseas platforms that Indian officials can hardly monitor. "The entire TDS goal is to track and trace transactions, but it has been beaten," Gupta said.

As a result of this tax, many crypto market players have switched to foreign trading platforms due to higher costs, which harm liquidity and hinder trade. Although the volume of crypto trading is increasing in the global market, India's domestic trading platform remains uncertain.

Prior to the tax implementation of 1% years ago, Coindcx was valued at around US$2.15 billion (Rp34.1 trillion). However, the company's revenue is now only about a third of what was recorded before the tax was imposed, and the company has cut 12% of its staff. The company's compliance costs have also increased since the government introduced anti-money laundering laws in the crypto sector.

Earlier this year, India also introduced a tax of 30% for crypto profits. There is no change in the tax regime that exists in the state budget for 2023, and no tax breaks are given to crypto industries or investors. Gupta from Coindcx anticipates that new regulatory clarity will emerge from the government by the end of 2025, following next year's general election.

Although activity on Indian crypto exchanges has declined, crypto adoption continues to grow in other ways, including crypto trading abroad and various related financial services. According to blockchain analytics firm Chainalysis, Indians have received crypto assets worth about $250 billion (Rp3.9 quadrillion) from this year to June.