Elevated TDS Impacts Cryptocurrency Trading in India

Ahmedabad: Avinash Shekhar, the co-founder and CEO of the cryptocurrency exchange Pi42, has articulated that a reduction in the Tax Deducted at Source (TDS) coupled with the provision for offsetting losses against profits would significantly elevate the transaction volumes for Indian cryptocurrency trading platforms. Such adjustments could potentially augment tax collections due to the resultant shift of investors from international to local exchanges. During a press engagement in the city, Shekhar expressed optimism that the government would consider the appeals lodged by domestic crypto exchanges and implement favorable amendments in the upcoming union budget.

Shekhar, who helped establish Pi42 in February as India’s inaugural Crypto-INR Perpetual Futures Exchange, pointed out that such a “futures” exchange is not subject to TDS. He noted that following the implementation of a one per cent TDS on on-the-spot cryptocurrency transactions, there was a notable migration of traders away from Indian platforms in favor of international exchanges, which are exempt from this regulation.

“The recent TDS stipulation has led to a downturn in transactions on Indian cryptocurrency exchanges. As a consequence, there has been a pivot towards offshore exchanges. The government initially aimed to moderate these activities and foster transparency and accountability—keeping track of who is involved in what. However, this goal has been only partially achieved, as foreign exchanges have not been forthcoming with information to the government,” Shekhar explained.