When you trade crypto in India, Crypto TDS India, a 1% tax deducted at source on crypto transactions above a certain threshold. It's not a tax on profits—it's a withholding tax applied every time you buy or sell, even if you lose money. This rule, introduced in July 2022 under Section 194S of the Income Tax Act, applies to everyone: retail traders, HODLers, and even people swapping one coin for another on exchanges like WazirX or CoinDCX.
Crypto tax India, the broader framework that includes TDS, capital gains, and income reporting. Also known as digital asset taxation, it treats crypto as a virtual digital asset, not currency. That means every trade triggers a taxable event, and exchanges automatically deduct 1% at the time of transaction. You can’t avoid it by using peer-to-peer platforms either—the law applies regardless of how you trade. The TDS on crypto, the specific 1% deduction applied to each transaction. It’s collected by the exchange and sent directly to the government, so you get a Form 26AS credit for it. But here’s the catch: this TDS isn’t your final tax bill. If you made a profit, you still owe capital gains tax—either 30% for short-term or 20% with indexation for long-term holds. And if you’re trading frequently, the IRS-style reporting means you need to track every single transaction, not just your annual profit.
Many Indian traders assume TDS is enough. It’s not. You still need to file your ITR and report all crypto activity, even if you lost money. Exchanges don’t calculate your net gain—they just take 1% off the top. If you sold Bitcoin for ₹5 lakh and bought Ethereum for ₹4.8 lakh, you still paid ₹5,000 in TDS, even though you lost ₹20,000. That TDS gets adjusted when you file your return, but only if you report everything correctly. Missing one trade can trigger a notice from the tax department.
What about crypto-to-crypto swaps? They count. Converting ETH to SOL? TDS applies. Using stablecoins to buy a meme coin? TDS applies. Even gifting crypto to a friend triggers TDS if the value exceeds ₹50,000. There’s no gray area. The rules are clear: if it’s a digital asset and you’re in India, you’re under this system.
Some platforms claim they don’t charge TDS. They’re either non-compliant, operating illegally, or hiding behind offshore accounts. Using them puts you at risk—not just from the tax department, but from scams and frozen funds. The safest path is using registered Indian exchanges that follow the law. You get clean records, automatic TDS deduction, and legal protection.
There’s no magic trick to avoid TDS. But you can use it smartly. Track every trade with a simple spreadsheet or free crypto tax tools. Save your TDS certificates. Know your cost basis. And don’t assume your exchange will handle everything—you’re still responsible for filing. The government isn’t going away. They’ve built real-time monitoring systems that connect bank data, exchange APIs, and blockchain analytics.
Below, you’ll find real breakdowns of how TDS hits your trades, what exchanges actually report, how to file your returns, and the scams that prey on people who don’t understand the rules. No fluff. Just what works in India right now.
India's no loss offset rule for crypto means traders pay tax on every profit-even if they lost money elsewhere. With no deductions, no carry-forwards, and 1% TDS on every trade, the system punishes active trading. Here's how it hits wallets and what to do now.
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