The Five Lines That Decide Your Crypto Trade's Outcome

The Indian crypto community has been debating exchange fees, but there's more to it than meets the eye. ChicksX notes that traders focus on the visible fee, often around 0.2 percent, while ignoring the invisible costs. A recent analysis breaks down a 1 lakh rupee trade into its constituent parts.

The trading fee is the most obvious cost, at 200 rupees for a 0.2 percent charge. However, this is dwarfed by the spread, which can quietly run several times the headline commission. On thin trading pairs, the spread can be as high as half a percent, adding 500 rupees to the total cost.

The tax architecture also plays a significant role in the overall expense. Since July 1, 2022, Section 194S of the Income Tax Act requires a 1 percent TDS on VDA transfers. This means that 1,000 rupees is withheld from each sale, refundable eventually against tax liability but gone from working capital today.

The 30 percent tax on gains is another major contributor to the total cost. If a trade results in a gain of 20,000 rupees, 6,000 rupees is lost to taxes, leaving the trader with a net outcome that doesn't care what anything is called.

Finally, there's the network fee, which is often the smallest number on the receipt but still an honest few rupees to move coins to one's own wallet. When all these costs are added up, the trading fee accounts for only around 3 percent of the total cost.