Binance Downloads Soar in India After Introduction of New Crypto Tax

Binance Takes off After New Tax Regime in India

India user signup soared on Binance after a 1% transaction tax went live in July, with 429,000 new downloads. Indian crypto exchanges have begun deducting the levy, unlike foreign competitors like Binance and FTX, prompting investors to switch to the latter.

New India Crypto Tax

India Finance Minister Nirmala Sitharaman introduced a 1% Tax Deducted at Source (TDS) on the transfer of virtual digital assets (VDAs) during the Union Budget 2022-23 in Parliament. The tax came into effect in July.

As per the new rules, the buyer of a VDA must deduct 1% of the amount paid to the seller (an Indian resident) as TDS. The new tax is levied on top of a further 30% tax on profits from crypto assets, which is steeper than jurisdictions such as the U.S. and U.K.

Impact on Crypto Exchanges

• Binance recorded the highest signups this year, almost triple that of runner-up CoinDCX.
• Another foreign exchange, FTX, saw almost 96,000 downloads in India in July and 52,000 in August -- up from about 40,000 in January.
• While Binance’s app downloads soared, some major Indian cryptocurrency exchanges are seeing declines in the number of user signups. For example, CoinDCX downloads dipped to 163,000 in August from 2.2 million in January.
• Daily volumes at leading India-based exchanges are down over 90% since the 1% crypto TDS took effect in July.

Check out the graph from market intelligence firm Sensor Tower:

A Binance spokesperson told Bloomberg the exchange is “currently monitoring the situation and will make further announcements regarding whether it has started collecting the levy in due course.”

Binance’s gains come amid rare public strife with WazirX, its partner in India, which led CEO Changpeng Zhao to encourage WazirX customers to defect to Binance. As a result, WazirX’s monthly downloads tumbled to 92,000 in August from about 596,000 in January.