India is on the brink of losing $2 billion in tax revenue over the next five years as cryptocurrency traders shift to offshore platforms, driven by strict tax policies. Here's what the Esya Centre's report reveals:
1️⃣ Since July 2022, the Indian government has missed out on ₹6,000 crore ($724 million) in taxes from virtual digital assets (VDAs).
2️⃣ A 30% capital gains tax on crypto transactions and a 1% TDS on domestic trades are pushing traders to offshore exchanges.
3️⃣ Despite attempts to block non-compliant platforms and tighten regulations under the Prevention of Money Laundering Act (PMLA), traders are bypassing restrictions using VPNs.
💻 Between July 2022 and November 2023:
Indian users traded ₹1.03 lakh crore ($12.3 billion) worth of VDAs offshore.
Uncollected TDS hit ₹3,493 crore ($417 million) during this period.
📈 The trend continued in 2024, with offshore trading volumes reaching ₹2.63 lakh crore ($31.1 billion). The total uncollected TDS since July 2022 exceeds ₹6,000 crore and could surpass ₹17,700 crore ($2.1 billion) in the next five years if policies remain unchanged.
💡 Fixing the Tax Trap
The report calls for urgent reforms, including:
Lowering the 1% TDS rate to 0.01%.
Revising Section 194S to make offshore platforms responsible for TDS deductions.
Allowing traders to offset losses against gains.
Industry leaders argue these changes could reignite domestic trading, but government action remains elusive.
💬 Can India adapt to retain its crypto traders, or will the exodus continue? Let's discuss!
