Ahmedabad, Pi42 cryptocurrency exchange co-founder and CEO Avinash Shekhar said on Tuesday that reducing TDS and allowing losses to be adjusted against profits would not only increase trading volumes for Indian crypto exchanges but which would also increase tax revenues as investors shift from foreign exchanges to domestic exchanges. .
Speaking to reporters here, Shekhar said that Indian exchanges are hopeful that the Center will take into account the requests of domestic crypto exchanges and bring necessary changes during the union budget.
In February, Shekhar co-founded 'Pi42', India's first Crypto-INR perpetual futures exchange, which is outside the TDS network by being a 'futures' exchange.
After the government imposed a 1 percent TDS on spot crypto transactions, volumes on Indian exchanges declined as traders moved to international exchanges that are beyond the fulfillment network, Shekhar said.
"Trading on the Indian cryptocurrency exchange has reduced due to the TDS rule. People are now trading more in currencies. The government's aim was to control this activity to some extent and provide transparency and visibility such as who is doing what. But that objective is not completely defined. The currencies are not providing information to the government," he said.
If Indian exchanges handle trade of Rs 100, international exchanges do transactions of Rs 500 to Rs 1,000, almost five to ten times more than Indian exchanges, he said, adding that even customer protection laws cannot be enforced on the exchanges. international companies operating from outside India.
He said there are three major issues that are negatively affecting our business and the stock exchanges have also conveyed this to the government.
The first major issue is the 1 per cent TDS levied on every spot transaction, he said.
"If a trader makes 10 transactions of Rs 1 lakh each, he will have to pay Rs 10,000 as TDS and will be refunded maybe after a year. So, all his capital is locked after a few transactions in a month and will not be able to "We will be able to trade more, so the biggest hurdle is 1 per cent TDS," he said, adding that the government introduced TDS with an objective to ensure reporting and monitoring of activities.
"So what we recommend is that the information reaches the authorities even with a TDS of 0.1 percent instead of 1 percent. A TDS of 0.1 percent will further improve market efficiency and stop migration of investors to foreign exchanges. A low TDS will also increase government revenue because investors will choose Indian exchanges over international ones," he said.
"Another problem is that the government does not allow offsetting losses. If you win Rs 100 in one trade and lose Rs 60 in another. Generally, in stock exchanges, you are supposed to pay tax on the remaining profits of Rs 40. But" Here the government ignores the losses and asks us to pay 30 percent tax on profits of Rs 100. So instead of profits, you end up losing money after paying taxes," he said.
He said that although the 30 percent tax on crypto profits is also an issue, it is not as big as the first two. However, Shekhar said the Center may think of reducing the rate.
"India has almost 8 large crypto exchanges, while five to six international exchanges are also active in the country. TDS is not deducted if a transaction is made through an international exchange. This is why most Transactions are carried out on offshore exchanges. If these three problems are resolved, the business will eventually move to India," Shekhar said.
Speaking to reporters here, Shekhar said that Indian exchanges are hopeful that the Center will take into account the requests of domestic crypto exchanges and bring necessary changes during the union budget.
In February, Shekhar co-founded 'Pi42', India's first Crypto-INR perpetual futures exchange, which is outside the TDS network by being a 'futures' exchange.
After the government imposed a 1 percent TDS on spot crypto transactions, volumes on Indian exchanges declined as traders moved to international exchanges that are beyond the fulfillment network, Shekhar said.
"Trading on the Indian cryptocurrency exchange has reduced due to the TDS rule. People are now trading more in currencies. The government's aim was to control this activity to some extent and provide transparency and visibility such as who is doing what. But that objective is not completely defined. The currencies are not providing information to the government," he said.
If Indian exchanges handle trade of Rs 100, international exchanges do transactions of Rs 500 to Rs 1,000, almost five to ten times more than Indian exchanges, he said, adding that even customer protection laws cannot be enforced on the exchanges. international companies operating from outside India.
He said there are three major issues that are negatively affecting our business and the stock exchanges have also conveyed this to the government.
The first major issue is the 1 per cent TDS levied on every spot transaction, he said.
"If a trader makes 10 transactions of Rs 1 lakh each, he will have to pay Rs 10,000 as TDS and will be refunded maybe after a year. So, all his capital is locked after a few transactions in a month and will not be able to "We will be able to trade more, so the biggest hurdle is 1 per cent TDS," he said, adding that the government introduced TDS with an objective to ensure reporting and monitoring of activities.
"So what we recommend is that the information reaches the authorities even with a TDS of 0.1 percent instead of 1 percent. A TDS of 0.1 percent will further improve market efficiency and stop migration of investors to foreign exchanges. A low TDS will also increase government revenue because investors will choose Indian exchanges over international ones," he said.
"Another problem is that the government does not allow offsetting losses. If you win Rs 100 in one trade and lose Rs 60 in another. Generally, in stock exchanges, you are supposed to pay tax on the remaining profits of Rs 40. But" Here the government ignores the losses and asks us to pay 30 percent tax on profits of Rs 100. So instead of profits, you end up losing money after paying taxes," he said.
He said that although the 30 percent tax on crypto profits is also an issue, it is not as big as the first two. However, Shekhar said the Center may think of reducing the rate.
"India has almost 8 large crypto exchanges, while five to six international exchanges are also active in the country. TDS is not deducted if a transaction is made through an international exchange. This is why most Transactions are carried out on offshore exchanges. If these three problems are resolved, the business will eventually move to India," Shekhar said.
