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Cryptocurrency volumes in India have dropped new laws to tax the digital assets kicked in on 1 April, according to Bitcoin.com. The Parliament approved the Finance Bill, which effects the cryptocurrency taxational laws announced in Budget.

Aditya Singh, co-founder of Crypto India, said the Indian exchanges saw volume drop after new crypto tax rules became applicable on 1 April. He tweeted volume graphs of four leading exchanges, where it has seen a significant dip.

Finance Minister Nirmala Sitharaman, in her Budget speech, announced a 30% flat tax on crypto income or digital asset investments. Later the government has also clarified that the investors cannot offset losses in one trade against gains in other.

Along with the capital gains charge, the finance ministry had also announced a 1% tax deductible at source, or TDS, on all digital-asset transfers above a certain size, starting July 1.

Crypto-exchange executives, lawyers and tax analysts warn that the TDS will suck liquidity out of the market by forcing high-frequency traders to dramatically curtail their trading.

Nischal Shetty, chief executive officer of WazirX, India’s biggest crypto exchange, called the TDS “the worst-case scenario for the industry," according to Bloomberg.

“There will be no liquidity left in the markets," said Manhar Garegrat, executive director of policy at crypto exchange CoinDCX. “Trades placed by buyers will not get executed as efficiently as they do today, and such inefficiency will eventually dwindle the whole ecosystem."

Under the new regime, the buyer of a crypto asset must deduct the 1% TDS on behalf of the seller if a transaction exceeds 10,000. Smaller trades would also be taxed if they top a cumulative 50,000 in a financial year.

Investors will be entitled to a refund if the total amount set aside for TDS during a fiscal year exceeds their overall tax liability for the period.

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