GetBit founder Abhay Agarwal announced that India is poised to adopt a more balanced cryptocurrency regulatory framework, signaling a potential overhaul of the current tax regime that imposes a 30% levy on crypto gains and a 1% Tax Deducted at Source (TDS) on every transaction.
Existing Tax Structure
According to Agarwal, the 30% tax rate on crypto profits exceeds the rates applied to most traditional asset classes, creating a disproportionate burden for investors. He highlighted that the 1% TDS functions as a liquidity tax, inflating transaction costs and deterring active participants in the blockchain market.
Anticipated Regulatory Adjustments
Agarwal expects regulators to revisit the tax framework as visibility into the sector improves and the industry matures. He foresees a reduction in the 1% TDS as the first major amendment, likely to materialize within the next two to four years.
Consequences for Market Liquidity
The 1% TDS has prompted a migration of liquidity away from India, according to Agarwal, because heightened costs hamper efficient price discovery. This friction particularly affects market makers, who face elevated expenses that can suppress trading volume and deter investors from participating in the crypto market.