India’s 1% tax on crypto transactions is causing the country’s crypto traders to flee local crypto exchanges – but some major players are benefiting from this trend.
For Binance, the controversial levy has generated an additional 429,000 downloads of the exchange’s app in August, its highest result this year.
Last month, Binance’s app was downloaded thrice as much as that of Indian crypto exchange CoinDCX, according to figures from market intelligence business Sensor Tower obtained by Bloomberg. Binance was also the only major platform to report higher downloads in the Indian market compared with July 2022.
Since the 1% tax deducted at source (TDS) was introduced last July, paired with a 30% income tax on all crypto profits in India, daily volumes at the leading India-based exchanges have dropped by more than 90%.
Big exchanges prospering from Indian crypto tax
Indian industry players have mostly complied with the law, imposing the levy on their users, but a number of major exchanges such as Binance and FTX have not applied the tax to their operations in India.
Commenting on the tax issue, a spokesperson for Binance said that the crypto exchange “is currently monitoring the situation and will make further announcements in due course”.
In comparison to the 1% crypto tax, the tax rate on stock trading ranges from 0% to 15% in India. Meanwhile, industry observers point to the various controversies related to the Indian levy’s scope.
“The recent tax regulation is not explicitly clear on whether the 1% tax deducted at source extends to crypto derivatives transactions involving futures, as it does to crypto spot transactions,” said Rohan Misra, the chief executive officer of SEBA India, an offshoot of Switzerland’s SEBA Bank AG.