Crypto volumes take a hit after new tax rules; what's the road ahead?

economictimes.indiatimes.com:

crypto holdings by showing them as capital gains or business income and paying the appropriate tax. Hence, with the introduction of new income tax rules on cryptocurrency, it was apparent that there would be some discomfort in the crypto industry. The new tax rules require crypto investors to pay tax at 30% (the highest tax bracket) on profits from the sale of crypto and NFTs. Unlike in other asset classes, retail investors will not be able to set off losses incurred against crypto coins, claim expenses or deductions, or benefit from a reduced slab for long-term capital gains. To trace crypto transactions, the government has imposed 1% TDS on every crypto transfer. This has come into effect from 1st July 2022. The new TDS provision would significantly impact intraday trader's capital. The funds will be locked up to a year until the income tax returns are filed for refunds.

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In the wake of the crypto market crash, the prices of hardware used to support the mining of crypto assets are also falling dramatically. For example, a high-end graphic card is now almost 45% cheaper compared to its price a few months ago.

As per industry reports, there was a drop in volumes of crypto transactions in the initial days after the crypto tax law came into effect. And as per experts, the volumes would further drop. However, before the new TDS law was effective, the government issued clarifications for the same. An attempt is made to remove hardships for the crypto traders by shifting the TDS compliance responsibility to crypto trading platforms. The exchanges are expected to include TDS clause in the existing customer agreements. They may also have to offer investors an understanding of how wallets'