Pi42 CEO Advocates for TDS Reduction and Loss Adjustments to Boost Indian Crypto Trading

Cryptocurrency exchange Pi42 co-founder and CEO, Avinash Shekhar, stated on Tuesday that reducing TDS and allowing losses to be adjusted against profits would increase trading volumes for Indian crypto exchanges. It would also lead to an increase in tax revenues as investors shift to domestic exchanges from offshore ones. Shekhar expressed hope that the Indian government would consider the requests of domestic crypto exchanges and make necessary changes during the upcoming budget. Shekhar, who co-founded ‘Pi42’, India’s first Crypto-INR Perpetual Futures Exchange, in February, mentioned that the exchange is outside the TDS net by being a ‘futures’ exchange. Following the government’s imposition of a 1% TDS on spot crypto transactions, the volumes of Indian exchanges decreased as traders moved to international exchanges beyond the compliance net, according to Shekhar. He noted that trading on Indian cryptocurrency exchanges reduced due to the TDS rule, leading people to trade more on foreign exchanges. Shekhar emphasized that while the government’s objective was to control this activity and bring transparency, it has not been fully achieved. He pointed out that foreign exchanges are not providing information to the government. Highlighting the significant impact on their business, Shekhar mentioned three major issues conveyed to the government. The first issue is the 1% TDS levied on each spot transaction. Shekhar explained the detrimental effect of this, stating that a trader doing multiple transactions could have their entire capital blocked due to TDS. Therefore, he suggested that even a 0.1% TDS could efficiently provide information to the authorities while preventing migration of investors to overseas exchanges. The second issue he highlighted was the government’s disallowance of setting off losses. Shekhar emphasized that this leads to traders paying taxes on profits without considering the losses incurred. Finally, Shekhar mentioned the 30% tax on crypto gains as another issue, albeit lesser in significance compared to the first two issues. He also suggested that reducing the tax rate could be considered by the government. He highlighted the impact of these issues on the Indian crypto market, explaining that TDS is not deducted for transactions through international exchanges, leading to most trades occurring in offshore exchanges. Shekhar emphasized that if these three issues are resolved, the business would eventually shift to India.