India’s cryptocurrency market has been facing challenges due to the stringent tax policies imposed by the government. The introduction of a 1% Tax Deducted at Source (TDS) on crypto transactions exceeding ₹10,000, along with a 30% capital gains tax on crypto profits in 2022, has raised concerns about the country’s position in the global digital economy.
The impact of these harsh regulations has been significant, with trading volumes on popular crypto exchanges like WazirX and CoinSwitch Kuber plummeting by over 70%. Many traders have been forced to exit the market, leading to a decline in India’s once-thriving digital asset ecosystem. WazirX co-founder Nischal Shetty has criticized the policy, stating that it penalizes high-frequency trading and alienates traders from the crypto market.
While government officials and supporters of the policy argue that these measures are necessary for regulation and financial oversight, industry experts believe that they have crippled trading activity in the country. The Ministry of Finance has defended the tax regime, stating that it helps to legitimize the crypto market and prevent illicit activities within the digital assets ecosystem.
In contrast to India’s crackdown on crypto, China has embraced blockchain technology as a strategic asset. The Chinese government recently announced a $54.5 billion national blockchain roadmap as part of its data governance strategy. Unlike India, China has opted for a capital gains tax structure for cryptocurrencies, which traders consider to be more business-friendly than India’s punitive TDS rules.
As China accelerates blockchain adoption and India’s crypto sector struggles under heavy regulation, the question arises: Is India positioning itself as a global leader in digital assets, or is it stifling its own potential with its stringent tax policies?
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