Ahmedabad: Cryptocurrency Exchange Leader Calls for Policy Revisions to Boost Domestic Trading
In a bid to revitalize trading volumes on Indian cryptocurrency exchanges, Avinash Shekhar, co-founder and CEO of Pi42, emphasized the need for lower Tax Deducted at Source (TDS) rates and the allowance of loss adjustments against profits. Shekhar asserted that these measures would not only enhance trading activity within India but also boost tax revenues as investors gravitate towards domestic platforms over international ones.
Addressing reporters in Ahmedabad, Shekhar expressed optimism that the Indian government would heed the appeals of local crypto exchanges and implement the necessary changes in the upcoming union budget.
“The Indian exchanges are hopeful that the Centre would take into account the requests of domestic crypto exchanges and bring in necessary changes during the union budget,” said Shekhar.
Shekhar, who co-founded Pi42 in February—India’s first Crypto-INR Perpetual Futures Exchange exempt from TDS due to its status as a futures exchange—highlighted the adverse effects of the current 1% TDS on spot crypto transactions. He noted that the imposition of this tax has driven volumes away from Indian exchanges to international platforms, which do not fall under the same regulatory purview.
“Trading in Indian cryptocurrency exchanges has reduced due to the TDS rule. People are now trading more on foreign exchanges,” Shekhar explained. “The government’s objective was to control this activity to an extent and bring transparency and visibility, like who is doing what. But that objective is not fully met. Foreign exchanges are not providing information to the government.”
Shekhar provided a stark comparison, stating that for every Rs 100 traded on Indian exchanges, international exchanges are handling Rs 500 to Rs 1,000—five to ten times more. This disparity, he added, not only hampers local exchanges but also limits the enforcement of customer protection laws on foreign entities operating outside India.
“The significant trading volume on international exchanges highlights the urgency for policy revisions,” Shekhar emphasized.
Shekhar identified three primary issues adversely affecting Indian crypto exchanges, all of which have been communicated to the government. The foremost concern is the 1% TDS levied on each spot transaction.
He elaborated on the impact of this tax, stating, “The 1% TDS on spot transactions is a major hurdle. It discourages active trading on Indian platforms and pushes investors towards international exchanges where such taxes do not apply.”
Shekhar argued that a reduction in TDS rates would likely lead to a resurgence in trading volumes on Indian exchanges, thereby increasing overall tax revenues. Additionally, allowing losses to be adjusted against profits would provide a more favorable trading environment and attract more investors to domestic platforms.
“Lowering the TDS rate and permitting loss adjustments would not only drive volumes but also increase tax revenues,” Shekhar asserted. “Investors would be more inclined to trade on Indian exchanges, leading to greater transparency and compliance.”
In conclusion, Avinash Shekhar’s call for lower TDS rates and loss adjustment provisions underscores a critical need for policy reforms to bolster the Indian cryptocurrency market. By addressing these issues, the government could stimulate domestic trading, enhance tax collection, and ensure greater regulatory oversight of crypto transactions. As the union budget approaches, the crypto community eagerly anticipates the government’s response to these pressing concerns.
