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:
1ïžâŁ Since July 2022, the Indian government has missed out on âč6,000 crore ($724 million) in taxes from virtual digital assets (VDAs).
2ïžâŁ A 30% capital gains tax on crypto transactions and a 1% TDS on domestic trades are pushing traders to offshore exchanges.
3ïžâŁ Despite attempts to block non-compliant platforms and tighten regulations under the Prevention of Money Laundering Act (PMLA), traders are bypassing restrictions using VPNs.
đ» Between July 2022 and November 2023:
Indian users traded âč1.03 lakh crore ($12.3 billion) worth of VDAs offshore.
Uncollected TDS hit âč3,493 crore ($417 million) during this period.
đ The trend continued in 2024, with offshore trading volumes reaching âč2.63 lakh crore ($31.1 billion). The total uncollected TDS since July 2022 exceeds âč6,000 crore and could surpass âč17,700 crore ($2.1 billion) in the next five years if policies remain unchanged.
đĄ 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.
đŹ Can India adapt to retain its crypto traders, or will the exodus continue? Let's discuss!