Exchanges in the process of writing to the Government to rethink the tax slabs
Despite the Union Budget imposing tax on cryptocurrencies, top crypto exchanges including WazirX, CoinSwitch Kuber and Unocoin reported a jump in sign-ups since February 1. New investors or users joining the platforms have increased by 35-59 per cent across exchanges. This comes at a time when crypto industry stakeholders are in the process of writing a petition to the government urging to rethink the stringent tax slabs especially TDS and give clarity on further details.
WazirX saw 59 per cent growth in daily sign ups, Unocoin saw 50 per growth while CoinSwitch Kuber reported 35 per cent jump post the Union Budget 2022 announcements on 30 per cent income tax and 1 per cent TDS (Tax Deducted at Source) to be deducted on cryptocurrency income and transactions.
Nischal Shetty, Founder and CEO, WazirX, told BusinessLine, “India is finally on the path to legitimising the crypto sector in India. So it’s phenomenal news for everyone to learn about the GoI’s forward-looking approach towards crypto while we deliberate on the finer details as an industry.”
“The new customers getting added on Unocoin has increased by 50 per cent on a day to day basis. We were welcoming 2,000 users per day and now it averages to 3,000 users per day. On the volume side, we have seen some uptick but that is in the range of 15-20 per cent. We also need to notice the new taxation rules is applicable only from April 1. So, the effect may be long term,” Sathvik Vishwanath, Co-founder and CEO of Unocoin, told BusinessLine.
CoinSwitch Kuber, however, calls it a result of the ongoing efforts by the company in terms of customer education more than a one-day event. A spokesperson said, “We saw about a 35 per cent increase in sign-ups after the Budget announcement. But this cannot be attributed entirely to the Budget as the Budget Day coincided with our ongoing investor education campaigns. The user behaviour on our platform is similar to what we would see on other business days, and the data doesn’t reflect any specific trend/investor sentiment yet.”
Uncertainty on taxes
Industry stakeholders are currently evaluating the long-term impact of introducing high taxes in this sector. Though the announcement provided some validation to the industry which so far has not been mentioned under any operating legal framework, the taxes decided on have been unanimously called unfair.
Vishwanath said, “Along with the crypto investors, Unocoin has also been writing a petition to request the government to reduce the taxes imposed on the crypto assets. Only three per cent of the total population who pay taxes fall under the 30 per cent slab and now the taxes imposed on crypto assets along with the TDS is higher than any other asset class. It took more than eight years for the government to come up with some regulations around income tax (on crypto) but the industry continues to believe the quantum and numbers are unfair.”
“We believe that potential crypto investors sitting on the sidelines are now ready to access and participate in crypto. Therefore, pioneers in the space want to build a conducive ecosystem for crypto and are collectively deliberating on the implications of the current tax regime proposed at the grassroots level,” Shetty added.