While Indian cryptocurrency exchanges lost a significant portion of their trading volume after new taxes for the sector came into effect, the losses have, until now, been in percentage terms, with most estimates citing that they were above 90%, compared to the previous one. year.
Now, a new study has quantified the value of cumulative trade that moved from Indian to foreign crypto exchanges after the new taxes came into effect.
CryptoPotato previously reported that Indian traders are flocking to foreign exchanges after the tax and regulatory environment in the country has become “unviable.”
$3.8 billion moved
Esya Centre, an Indian think tank on technology policy issues, at a report posted on Jan 3, it said that Rs. Rs 32 billion ($3.85 billion) of cumulative trading volume moved from Indian cryptocurrency exchanges to foreign competitors between February and October 2022.
The report, titled “Virtual Digital Assets Tax Architecture in India: A Critical Examination,” examines how new taxes for the national crypto market proposed in the 2022-23 Union Budget on Feb. 1 affected overall business in this sector.
He said Rs. 25.3 billion rupees ($3.05 billion) of cumulative transactions moved out of India’s cryptocurrency exchanges in the six months to October 2022, that is, since the new taxes went into effect on April 1.
Taking peer-to-peer trading into account, the total contribution of India’s trade volume to currencies is of the order of Rs. 80 billion rupees ($9.67 billion), according to the Esya Center report.
“India’s tax treatment for VDAs is regressive compared to other countries with high VDA adoption rates, such as the US, UK, South Africa, Vietnam, the Philippines and Brazil,” he said.
The decline in trading volume occurred gradually, according to the report, with the initial push claiming 15% of trading volume in the first two months since Indian Finance Minister Nirmala Sitharaman’s tax amendment in his budget speech on February 1. , 2022.
Another 14% was lost in the three months since April 2022, when the 30% tax on crypto profits went into effect. The heavy taxation was implemented without the provision to offset losses with gains.
The third and final blow came when a 1% transaction tax came into effect on July 1, 2022, eroding up to 81% of trading volume on Indian stock markets, according to the report.
“Many Indian VDA users appear to be switching from domestic centralized VDA exchanges to foreign counterparts (estimated 17 lakh users switched in the analyzed period), a trend visible as of February 2022 (i.e. after the announcement of the Union budget)”, states the report. .
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This post $3.8 billion of cumulative volume moved offshore since Indian crypto taxes kicked in
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