Following the decision to impose tax on cryptocurrencies in India, $3.8 billion worth of assets were moved to exchanges operating outside the country.
India has imposed two taxes on crypto transactions since April 1, 2022. One of them is 30% capital gain and the other 1% transaction tax.
Crypto Outflows Increase With Tax Decision
Indian cryptocurrency exchanges have lost a significant portion of their trading volume with the enactment of new taxes for the sector. It was stated that the losses increased by 90% compared to the previous year.
A new study has measured the value of cumulative trades moving from India to foreign cryptocurrency exchanges following the introduction of taxes.
The India-based think tank Esya Center stated that the cumulative trade volume of $3.85 billion shifted from the Indian stock markets to foreign stock markets between February 2022 and October 2022.
According to the report, the decrease in trade volume occurred gradually. The first major drop came after the tax change, which India’s Finance Minister Nirmala Sitharaman made in her budget speech on February 1. In that period, the trade volume decreased by 15% in the first two months.
After the tax came into effect in April 2022, there was another 14% loss in the three months.
The third and final drop came with the introduction of the 1% transaction tax in July 2022. After this tax, 81% of trading volume on Indian stock markets was lost.