The taxation is on the high side though. If it is an indirect way to discourage Indians from using crypto currency, then I think it is not a good one because they would end up frustrating the exchange which already they have started doing and from what you have said, Indians no more use exchange for trading and I believe it is as a result of the taxation levied on them.
This action by the government would discourage local exchange from growing and also the people would seek for another alternative means of doing Crypto transactions and the government would entirely lose out from the tax they receive.
If that situation happens then their local exchange will not survive. and the result is that they will go bankrupt if no members trade or use their services.
If taxes are deemed too high, why can't negotiations be carried out between the government and business players in the industry? I think if we talk about it, they will find a middle ground that is beneficial for both parties.
however, people will be comfortable using local exchange platforms with instant withdrawals to their bank accounts. but if there is a problem of high taxes, they will use large exchange platforms like Binance for trading. Meanwhile, for withdrawals to bank accounts, many people may choose to use P2P.
The taxation is quite on the high side though but I just think it is a measures by the government to piss of Crypto enthusiasts from carrying out Crypto transactions and this would affect the exchange as well because they are the ones that would be at loss because they have spent so.mhch funds in building their business brand in that country but looking at it that the way, the government seems to be frustrating them for no.kust cause.
I think a p2p system would be their next resolve if the local exchange decides to act accordingly with the government policy. This would cause a decline in the use of Crypto exchange over there, forcing members to resort to using a p2p platform which they are very much sure of.