Since India implemented tax on cryptocurrency transactions, 83 percent of active traders have indicated their trading frequency has suffered, according to a survey by crypto exchange WazirX and Zebpay involving close to 9,500 respondents.
According to the survey, around 24 percent of respondents are contemplating shifting their trading activities to international exchanges owing to the high taxation and 29 percent traded less than the pre-tax period.
The survey revealed that 27 percent of the respondents sold over 50 percent of their portfolio before April 1 when the 30 percent capital gains tax was implemented. About 57 percent of respondents sold under 10 percent.
The revenue from tax collections for the government is expected to decline as 27 percent of customers (34 percent traders and 23 percent holders) said they would trade less than earlier owing to the current taxation policy.
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The survey was conducted among a pool of traders and holders. The traders were classified as those who traded every day, more than five times a week or at least more than twice a week. The holders were those who traded a few times a month or were invested for the long term.
The respondents for the survey only involved traders who actively traded from the starting of this year till April 15.
The report indicated that the worst impacted were millennials as 28 percent of the respondents aged 18 and 35 sold more than 50 percent of their holdings before April 1, while 23 percent wished to move their holdings to an international exchange to avail of a more favourable tax climate.
This emigration posed a significant risk in terms of investors falling prey to non-KYC compliant international exchanges.
Also read: Stocks vs cryptocurrencies: Understanding the main differences between the two asset classes
The holders, on the other hand, had continued to retain their positions, with 45 percent saying they would hold on to their positions. This signifies their faith that the tax provisions will be made more conducive in the longer term, the report states.
Addressing the survey findings, Rajagopal Menon, Vice President, WazirX, said, “The survey results stipulate the need to reform certain conditions to aid the growth of crypto investors in the country, which will result in economic prosperity. The tax regime needs to be balanced to encourage participation and revive trading volumes.”
Avinash Shekhar, CEO of ZebPay, said the survey results indicate a considerable number of respondents intend to reduce their trading frequency.
"Crypto is driving revolutionary change across the world and it is in our nation’s interests to encourage, not dissuade participation. Restrictive policies serve as a barrier to both adoption and innovation. While India’s crypto tax policy is a step forward, reconsidering certain aspects will help build a more supportive regulatory environment for all industry stakeholders and will ultimately contribute to overall economic progress,” Shekhar added.
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