Foreign market surpasses India's crypto market consequences and sees a downfall throughout 2022, because of hefty tax implications.

Major Indian exchanges saw a sharp decline in cryptocurrency trading volume last year. That's because bankruptcy of the cryptocurrency exchange FTX, the transaction volumes on India's crypto market exchanges have dropped by 30% to 50%. If nothing major occurs in the crypto market in the near future, local crypto specialists do not anticipate a comeback. With the forthcoming Union Budget 2023, the government's tough approach to cryptocurrencies could impact industry hopes and lose investors' enthusiasm. The foreign market surpasses India's crypto market quickly in a few days since the government imposes a thirty percent tax on revenues from cryptocurrency trading.

The foreign crypto market is taking benefit after an enormous uproar ensued from the Finance Minister's announcement in 2022 regarding the tax implications under Section 115BBH Act. According to the minister, losses from one cryptocurrency asset cannot be compensated by gains from another cryptocurrency asset. The ministry also declared that starting on July 1, 2022, crypto would be subject to a 1% TDS charge. 

Investors and traders are going to foreign markets or perhaps the grey marketplace as a consequence of the numerous regulatory complications, difficulty dealing directly, and documentation that has been accumulated for every single trade. While Indian exchanges have been impacted, trading volumes have increased worldwide as cryptocurrency prices have dropped.

Tax exemptions are in place because cryptocurrencies jeopardize the ponzi scam that these nations' financial institutions that employ substantial reserves are engaged in. Ponzi schemes guarantee low-interest rates as long as people retain their money in the bank. Even worse, they literally increase the amount they have in reserve digitally, creating cash out of the public deposit, and then loan it to other people. When the majority of participants pull their funds all at the same time, a Ponzi collapses, and the current banking system has already been experienced. The reason why the government wants people to store their money in a bank is that doing so improves the value that can be loaned out, and eventually the amount of money that can be borrowed.

The GDP and the entire economic structure of India would collapse overnight if everyone start keeping their money in cryptocurrency. Cryptocurrency is not subject to the unfair trade restrictions and targeted sanctions that are imposed on nations and the people who live there. It is a global currency and the wealth of the public.

India's tax structure, which was intended to promote transparency and responsibility in the cryptocurrency industry, has proven ineffective. These rules have demotivated compliance by choosing the highest tax rate, one without the counterbalance options granted to other asset classes, and a bracket with an overly high TDS of 1%.

Evidently, India's tax policy on cryptocurrencies needs to be reconsidered immediately. Hopefully, the 2023 Union Budget will be forgiving on tax exemptions by taking into account the adverse effects that the country suffers from the high taxes, saving the country from the revenue on cryptocurrency investments.