Recently introduced tax laws are affecting not only the KYC-compliant cryptocurrency exchanges operating in India, but also cryptocurrency traders who use these exchanges to invest in cryptocurrencies.
Cryptocurrency exchanges Wazir X and Zebpay claim that the majority of active crypto traders are facing difficulties with the current tax system, based on the Trader Sentiment Survey.
The cryptocurrency exchanges mentioned above conducted a collective vote, including traders who were active from January 1st to April 15th. The purpose of this study was to measure cryptocurrency dealers’ sentiment towards the newly implemented 30% tax on the profits of cryptocurrencies and other virtual digital assets. ..
The survey conducted by the exchange consisted of approximately 9,500 participants from all over the country.
The exchange outlined in a report the difference between traders and holders. The study explains that traders engage in trading at least five times a week, or at least twice a week, daily. Conversely, holders are long-term investors.
The survey concluded that:
According to the report, 83% of traders believe that existing tax systems have reduced the frequency of transactions.
According to 29% of respondents, traders trade less frequently than they did before the new tax system began on April 1.
In addition, 27% of respondents sold more than 50% of their cryptocurrencies before the start of the new fiscal year.
57% of them made a profit with up to 10% of their holdings, but not the rest.
Polls show that young traders and investors are more affected than older traders.
It is worth noting that the report did not take into account 1% of the withholding tax (TDS) that came into effect on 1 July.
Finance Minister Nirmala Sitharaman introduced a 30% tax on cryptocurrency acquisition and a 1% TDS on cryptocurrency transfer in the federal budget in February.