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Crypto tax: Many traders sold over 50% of their portfolio before April 1, says survey

Crypto tax impact: A large number of crypto traders in India sold over 50% of their portfolio before the 1st of April 2022

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The crypto tax law mandates that the taxpayer cannot carry forward cryptocurrency losses. Representative image

A large number of crypto traders in India sold over 50% of their portfolio before the 1st of April 2022, when a new rule mandating a 30% flat tax on income from cryptocurrencies became effective, according to a survey. 

A Trader Sentiment Survey conducted by WazirX and Zebpay reveals that most of the crypto traders in India believe that the recent implementation of crypto tax laws has deterred their trading frequency. The survey indicates most of the traders are contemplating shifting to international exchanges due to high taxation in India. 

The survey involved 9,500 respondents who have actively traded from the start of the year till 15th April 2022. As many as  83% of traders believed that the recent tax implementation deterred their trading frequency. Around 24% of respondents said they were contemplating shifting their trading activities to international exchanges owing to the high taxation. Also, 29% of the respondents traded lesser than the pre-tax period. 

The survey further revealed that 27% of the respondents sold over 50% of their portfolio before 1st April, whereas 57% sold under 10%. 

Revenue from tax collections for the government may decline as 27% of customers (34% traders and 23% holders) said they will trade less than earlier owing to the current taxation policy. 

Commenting on 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.”

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The report further indicated that the worst impacted were millennials compared to their senior counterparts. 28% of the respondents aged 18 and 35 have sold more than 50% of their holdings before 1st April. As many as 23% of respondents wished to move their holdings to an international exchange to avail a more favourable tax climate. 

Avinash Shekhar, CEO of ZebPay, said, “The results indicate a considerable number of respondents intend to reduce their trade frequency and participation in the category. 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.”

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