Indian Crypto Traders Exploring Foreign Exchanges To Avoid Paying TDS: Report

Cayman Islands-registered crypto exchange app Binance was downloaded 750,000 times by users in India in the last two months.

Cryptocurrencies are clubbed under virtual digital assets (VDAs) in India.

Source : André François McKenzie/Unsplash

As per the current tax regime in India, cryptocurrencies are clubbed under virtual digital assets (VDAs). As such, crypto attracts a 30 percent tax on all gains. On top of that, an additional tax deducted at source (TDS) of 1 percent is imposed. For traders who have to pay this TDS on every transaction they make, this has become a considerable pain point. Hence, they are reportedly rushing off to global platforms such as Binance and KuCoin to carry out their trade. 

According to a report by Mint, based on data from app analytics platform AppTweaks, in the months of June and July, Cayman Islands-registered crypto exchange app Binance was downloaded 750,000 times by users in India. Apart from that, US-based Coinbase and Singapore-based KuCoin saw nearly 200,000 downloads. The comparatively less-popular Kraken, based in San Francisco, saw around 16,000 downloads. The report noted, based on a source input, that about 40-50 percent of these downloads generally convert to active users.

The 1 percent TDS went into effect in July for Indian exchanges. However, global crypto platforms continue to operate as earlier and are not subject to the new taxation structure. 

In the meantime, Reserve Bank of India (RBI) Governor Shaktikanta Das continues to maintain a strong stance against crypto coins due to their extemely volatile nature. According to Das, cryptocurrency can impact the exchange rate. As a result, crypto could create financial instability, the governor added. The banking regulator chief stressed that dealing with cryptocurrencies may pose a big risk for small investors. However, he also said that in the case of crypto, the benefit of technology needs to be capitalised. 

The Centre is presently in the process of finalising a consultation paper on crypto and its various facets, after gathering inputs from stakeholders and institutions. 

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.