India’s Poor Policy end up losing Rs 6000 cr in taxes in Virtual Digital Assets ( VDAs)

India’s 30% capital gains tax and 1% Tax Deducted at Source (TDS) on Virtual Digital Assets (VDAs) were implemented with the intent of regulating the market and boosting tax compliance.

However, these policies have resulted in unintended consequences: migration of trading activity to offshore platforms, significant revenue losses, and stifling the growth of the domestic VDA market.

India ranks 1st with 103 million + crypto users in world

Key Facts at a Glance

• Revenue Loss: ₹60 billion+ in uncollected TDS from offshore trading since July 2022.
• Migration to Offshore Platforms: 91% of Indian VDA trading activity occurs offshore.
• Domestic Exchange Decline: Trading volumes dropped by 92% on Indian platforms after TDS enforcement.
• Global Ranking: India ranks #1 in grassroots crypto adoption but struggles to retain trading domestically.

Impact of India’s Tax Policies on VDAs

1. Trading Volume and Migration