Crypto Unicorn expects India to lower tax that crushed trading
A tax that pulverized digital-asset trading in India has proved counterproductive and ought to be lowered, according to CoinDCX, a domestic exchange that was valued at over $2 billion before the levy was imposed.
The nation applied the 1% TDS tax on crypto transactions 16 months ago, saying the goal was to track buying and selling rather than raise revenue. But the levy drove 95% of Indian trading volumes to overseas platforms that are difficult for local officials to monitor, CoinDCX Chief Executive Officer Sumit Gupta said.
“The whole purpose of the TDS was to track and trace transactions but that is getting defeated,” Gupta said in an interview, adding that he expects the government to lower the tax in time as it grasps the problem.
The levy led market makers to exit Indian exchanges due to higher costs, sapping liquidity and deterring trading. Local platforms remain in limbo even as a Bitcoin rebound from 2022's crypto rout aids volumes elsewhere in the world.
Awaiting Change
India has called for a globally coordinated approach to crypto rules with the help of multilateral institutions. Gupta said he anticipates more regulatory clarity by the end of 2025, following the nation's general election in 2024.
India's Finance Ministry spokesperson didn't respond to emails and text messages seeking comment on the country's crypto tax policy.
CoinDCX in April last year unveiled a $135 million funding round led by Pantera Capital and Steadview Capital Management LLC that valued the firm at $2.15 billion. India put the 1% TDS in place from July 2022.
Revenues at CoinDCX are one-third of the levels that prevailed prior to the tax change, Gupta said, adding compliance expenses have gone up after India applied anti-money laundering
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