Crypto TDS in India 2026: 1% TDS, Section 393, P2P & AIS Guide

Last updated: 2026

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Author: EDITORIAL TEAM

Important tax disclaimer: This article provides general educational information and is not personal tax, accounting, financial or legal advice. Crypto taxation depends on the taxpayer’s status, residency, transaction structure, records and applicable law. Consult a qualified Chartered Accountant or tax professional before deducting tax, filing a TDS statement or submitting an Income Tax Return.

Crypto TDS in India is often misunderstood because the amount deducted during a trade is not calculated in the same way as the trader’s final income-tax liability.

The 1% deduction generally applies to the value of a qualifying Virtual Digital Asset transfer, not merely to the profit earned from it. This means TDS may be deducted even when a token is sold at a loss, when an investor is only recovering the original purchase cost or when repeated trading has produced little overall income.

A second source of confusion is the change that took effect on 1 April 2026. Older articles refer almost exclusively to Section 194S of the Income-tax Act, 1961 and Form 26QE. Those references remain relevant to transactions and returns governed by the previous Act, but the Income-tax Act, 2025 is now in force for Tax Year 2026–27. Under the new framework, the corresponding VDA deduction provision appears in Section 393, and the PAN-based challan-cum-statement used by an individual or HUF is Form 141 rather than Form 26QE.

The basic policy has not disappeared. A 1% deduction continues to apply to qualifying consideration for the transfer of a VDA, subject to the applicable annual threshold. What has changed is the statutory numbering, terminology and filing form used for transactions occurring from 1 April 2026.

This guide explains:

who is expected to deduct TDS;
how the ₹50,000 and ₹10,000 thresholds work;
how Indian exchanges commonly handle the deduction;
what buyers must consider in direct P2P transactions;
why DEX and self-custody transactions are difficult to reconcile with the TDS system;
how to match exchange reports with AIS and Form 26AS;
how excess TDS may become refundable;
and why the 1% deduction is not the final 30% tax on VDA income.

Quick Answer: How Does Crypto TDS Work in India?

For a qualifying payment to a resident for the transfer of a Virtual Digital Asset, the payer or another person permitted to handle the obligation under the exchange framework generally deducts tax at 1% of the consideration.

The deduction is normally based on the transaction value, not the seller’s profit.

The standard annual thresholds remain:

Payer category	Annual threshold
Qualifying individual or HUF covered by the higher threshold	₹50,000
Other payers	₹10,000

The ₹50,000 category broadly covers an individual or HUF whose preceding-year business turnover did not exceed ₹1 crore, whose professional receipts did not exceed ₹50 lakh, or who did not have business or professional income. The exemption wording is based on the value or aggregate value of consideration during the relevant year, so it should not be treated as a separate threshold for every trade.

For transactions up to 31 March 2026, older Section 194S and Form 26QE references may still apply. For a qualifying transaction on or after 1 April 2026, the corresponding rule is found under Section 393 of the Income-tax Act, 2025. An individual or HUF using the PAN-based challan-cum-statement process files Schedule D of Form 141 and generally pays and reports the deduction within 30 days from the end of the month in which it was made.

The amount deducted can be claimed as a tax credit if it has been deposited correctly and appears against the seller’s PAN. It does not replace the separate calculation of taxable VDA income.

The Critical 2026 Change: Section 194S Versus Section 393

Anyone researching crypto TDS in India during 2026 must first identify the date of the transaction.

Transactions occurring on or before 31 March 2026

These remain connected to the Income-tax Act, 1961 framework. The relevant provision is Section 194S, and an eligible individual or HUF who personally had to report a PAN-based VDA deduction used Form 26QE.

Income earned during Financial Year 2025–26 is also filed for Assessment Year 2026–27 under the old Income-tax Act, 1961, even though the return may be filed after the new Act came into force.

Transactions occurring from 1 April 2026

The Income-tax Act, 2025 applies from 1 April 2026. The corresponding deduction rule for consideration paid for the transfer of a VDA appears under Section 393(1), Table Serial Number 8(vi).

The standard rate remains 1%, while the annual exemption thresholds continue to be ₹50,000 for the qualifying individual or HUF category and ₹10,000 for other payers.

For a PAN-based deduction made by an individual or HUF, the old Form 26QE has been consolidated into Form 141. VDA transactions are reported in Schedule D of that form. Form 141 is available under the Income-tax Act, 2025 section of the e-filing portal.

2026 transition table

Transaction or filing situation	Applicable framework
VDA payment or credit on or before 31 March 2026	Income-tax Act, 1961 and Section 194S
PAN-based individual/HUF filing for an old-period transaction	Form 26QE
VDA payment or credit from 1 April 2026	Income-tax Act, 2025 and Section 393
PAN-based individual/HUF filing from 1 April 2026	Form 141, Schedule D
Return for income earned in FY 2025–26	Old Act; AY 2026–27
Income and transactions in Tax Year 2026–27	New Act framework

This date split matters because an article that instructs readers to use Form 26QE for every transaction in 2026 may direct them to the wrong form.

What Is Crypto TDS?

TDS means Tax Deducted at Source. Instead of waiting until the seller files a return, part of the payment is withheld when the transaction occurs and deposited against the recipient’s PAN.

In a straightforward transaction:

A resident transfers a qualifying VDA.
The buyer or responsible intermediary calculates the deduction.
The appropriate amount is withheld or otherwise paid before the consideration is released.
The deduction is deposited with the government.
The seller receives credit for the amount through the tax-reporting system.
The seller later calculates the actual tax on VDA income and claims the available TDS credit.

Under the previous Section 194S wording, a person responsible for paying consideration to a resident for a VDA transfer was required to deduct 1% at the earlier of credit or payment. The provision also addressed consideration paid wholly in kind, partly in kind or in exchange for another VDA.

The new Section 393 framework preserves the 1% rate and requires tax to be ensured before releasing consideration when the payment structure does not provide enough cash to cover the deduction.

TDS therefore acts mainly as an upfront collection and transaction-reporting mechanism. It should not be treated as a statement that the transaction was profitable, safe, lawful under every other regulation or fully taxed.

What Counts as a Virtual Digital Asset?

The VDA definition is wider than only Bitcoin or Ethereum. It can include crypto assets, certain tokens, non-fungible tokens and other notified digital assets, subject to statutory inclusions and exclusions.

Indian currency, foreign currency and qualifying central bank digital currency are not automatically treated as VDAs merely because they can exist electronically. The classification depends on the statutory definition, not on whether an asset is described as “digital” in marketing material.

For most retail users, common transfers that may need to be reviewed include:

selling crypto for INR;
selling a token for a stablecoin;
exchanging one VDA for another;
transferring an NFT for consideration;
buying crypto directly from another person;
paying for goods or services with a VDA;
disposing of a VDA through an exchange, broker or OTC desk.

Moving an asset between two wallets owned by the same person is different from transferring ownership to another party. However, wallet records should still be preserved so the taxpayer can demonstrate that the movement was an internal transfer rather than a sale.

Who Deducts TDS on Crypto Transactions?

The practical answer depends on how the trade is executed.

Indian Centralized Exchange Trades

For many users, trading through an Indian centralized exchange is the simplest TDS scenario.

CBDT’s exchange framework permits an exchange to handle the deduction or deposit obligation in specified circumstances, including through an agreement with the buyer and seller. For VDA-to-VDA trades, an exchange may also follow the prescribed mechanism for ensuring that tax is deposited.

A typical platform may:

calculate 1% of the relevant transaction value;
deduct the amount automatically;
show it in the trade history or tax report;
deposit it against the user’s PAN;
and report the relevant information through its applicable filing process.

From Tax Year 2026–27, an exchange that has agreed to deposit tax under the exchange framework uses Form 142 for its quarterly VDA statement.

However, users should not assume that every platform handles every transaction correctly merely because its interface displays a “TDS” line.

Check:

whether the platform has your correct PAN;
whether the amount was deducted on the correct transaction;
whether the credit appears in Form 26AS;
whether the transaction information in AIS is reasonable;
and whether the exchange’s annual statement matches your downloaded order history.

A dashboard deduction is useful evidence, but the most important question for claiming credit is whether the amount was deposited and mapped to the correct PAN.

INR-to-Crypto Purchases on an Exchange

A retail user who deposits INR and buys crypto through an exchange does not normally see 1% deducted from the INR purchase in the same way a seller sees TDS from sale proceeds.

The deduction mechanism focuses on consideration paid to the resident transferring the VDA. In an exchange-facilitated transaction, the platform’s structure and CBDT exchange guidelines determine how the responsible parties’ obligations are handled.

The buyer should nevertheless keep:

INR deposit confirmations;
purchase contract notes;
fee records;
token quantity;
acquisition date;
acquisition cost;
and the platform’s tax statement.

These records become essential when the asset is later sold and the taxable result is calculated.

Selling Crypto for INR

Suppose a user sells crypto for ₹2,00,000 after crossing the applicable annual threshold.

At the standard rate:

Sale consideration: ₹2,00,000
TDS rate: 1%
TDS amount: ₹2,000
Balance before other fees: ₹1,98,000

This calculation says nothing about whether the seller made a profit.

If the tokens originally cost ₹2,40,000, the user has an economic loss of ₹40,000 but may still have ₹2,000 deducted because TDS is based on consideration rather than profit.

If the tokens originally cost ₹80,000, the user has an economic gain of ₹1,20,000, and the ₹2,000 TDS is only a credit toward the final tax calculation.

Crypto-to-Crypto Transactions

A swap from one VDA to another should not automatically be treated as a tax-free exchange merely because no INR enters the user’s bank account.

The law addresses consideration paid in kind and consideration exchanged for another VDA. Where insufficient cash exists to cover TDS, the responsible person must ensure that the tax has been paid before releasing the consideration. The post-April 2026 Form 141 interface specifically includes transaction fields for cash, in-kind consideration and consideration received in exchange for another VDA.

On an exchange, the platform may use a prescribed arrangement to manage this process.

Outside an exchange, the situation can be significantly more difficult because each party may be both a transferor and a recipient of another asset. The parties need a defensible INR valuation, counterparty information and a clear understanding of who will deposit the tax.

Direct P2P Crypto Transactions

P2P transactions create one of the most important crypto TDS risks in India.

Assume Buyer A purchases crypto directly from Seller B, who is an Indian resident. Buyer A sends INR directly to Seller B’s bank account, and Seller B releases the crypto.

Where the applicable threshold has been exceeded and no exchange handles the obligation, Buyer A is generally the person paying consideration for the VDA transfer. The buyer must therefore examine whether tax has to be deducted before making the full payment.

CBDT’s guidance for transactions outside an exchange places the deduction responsibility on the buyer in a direct peer-to-peer transaction.

P2P example

The parties agree that the crypto is worth ₹1,00,000.

At a 1% standard rate:

Agreed consideration: ₹1,00,000
TDS: ₹1,000
Net amount paid to seller: ₹99,000
TDS deposited against seller's PAN: ₹1,000

The commercial difficulty is obvious. Some sellers expect the entire ₹1,00,000 in their bank account and may refuse to release the crypto if they receive ₹99,000.

That disagreement does not by itself remove the tax obligation. The parties should determine before the trade whether the quoted price is gross or net of TDS and who will complete the filing.

P2P compliance information a buyer may need

For a direct transaction, the buyer may require:

the seller’s legal name;
valid PAN;
residential status;
date of transfer;
date of payment or credit;
total value of consideration;
amount on which tax is deductible;
amount deducted;
and proof of deposit.

A person should not send money merely because a P2P profile appears to have completed many orders. Tax identity, bank-account identity and platform identity can be different.

P2P trading also carries non-tax risks, including disputed payments, third-party bank transfers, fraudulent chargebacks and accounts linked to cybercrime complaints. TDS compliance does not protect the buyer or seller from those risks.

Which Form Is Used for P2P Crypto TDS in 2026?

The correct form depends on the transaction date.

For payment or credit on or before 31 March 2026

An eligible PAN-based individual or HUF used Form 26QE under the previous Section 194S process.

For payment or credit from 1 April 2026

The PAN-based challan-cum-statement is Form 141 under the Income-tax Act, 2025.

For an individual or HUF reporting tax deducted on a VDA transfer:

Log in to the income-tax e-filing portal using PAN credentials.
Open e-File.
Choose e-Pay Tax.
Select the Income-tax Act, 2025.
Start a new Form 141 payment.
Select Schedule D – TDS on transfer of Virtual Digital Assets.
Enter the deductee and transaction information.
Verify the value of consideration and deduction.
Pay and submit the challan-cum-statement.
Preserve the acknowledgement and payment receipt.

Form 141 is limited to resident deductees. It must generally be filed within one month from the end of the month in which the deduction was made, with payment due within 30 days from that month-end. A certificate can subsequently be accessed through TRACES.

Do not use Form 141 mechanically for a payment to a non-resident. Non-resident payments require separate analysis.

Is a TAN Required?

The PAN-based challan-cum-statement route is designed so that the qualifying individual or HUF does not need to obtain a TAN merely to file the relevant form.

Under the old system, the Income Tax Department expressly stated that a payer filing Form 26QE did not need a TAN. The new Form 141 process is similarly accessed through PAN login.

Businesses and other deductors with regular TAN-based responsibilities may have different filing requirements. They should not assume that the individual/HUF workflow applies to them.

How Do the ₹50,000 and ₹10,000 Thresholds Work?

The law provides an exemption where the value or aggregate value of consideration during the relevant year does not exceed the applicable threshold.

₹50,000 threshold

The higher threshold generally applies when the payer is an individual or HUF who meets the statutory conditions, including:

preceding-year business turnover not exceeding ₹1 crore;
preceding-year professional receipts not exceeding ₹50 lakh; or
no income under the head “Profits and gains of business or profession.”

₹10,000 threshold

The lower threshold generally applies to a payer who does not fall within the qualifying individual/HUF category.

The current Section 393 framework retains these amounts.

The threshold is not normally per trade

A trader should not treat each ₹9,000 or ₹49,000 transaction as automatically exempt.

The provision looks at the value or aggregate value of consideration during the year. Repeated smaller payments can therefore cross the threshold cumulatively.

Example: qualifying individual

Assume a qualifying individual pays the following amounts to acquire VDAs from the same resident seller:

Month	Payment	Running total
April	₹20,000	₹20,000
May	₹15,000	₹35,000
June	₹18,000	₹53,000

The aggregate has now exceeded ₹50,000. The buyer should not assume that only the ₹3,000 excess is relevant. The threshold operates as an exemption condition, and the treatment of the threshold-crossing payment should be confirmed before payment rather than reconstructed casually at year-end.

Exchange aggregation may look different

On a centralized exchange, the user may not know the identity of each market counterparty. The exchange’s approved framework and reporting process may therefore determine how the threshold and deduction are implemented on the platform.

This is another reason to download the exchange’s tax policy and annual report instead of relying only on assumptions based on direct P2P rules.

Why 1% TDS Is Not the Final Crypto Tax

The difference between TDS and final tax is the most important part of crypto tax compliance.

TDS calculation

TDS is generally calculated as a percentage of consideration:

TDS = Relevant transaction value × 1%

Income calculation

Taxable VDA income is calculated separately under the applicable VDA income provisions.

Official guidance continues to state that income from the transfer of VDAs is taxed at 30%, plus applicable surcharge and cess. Other expenses are generally not deductible except for the permitted cost of acquisition, and VDA losses are subject to restrictive set-off treatment.

A simplified calculation is:

Positive VDA income = Sale consideration − Permitted cost of acquisition
Income tax = Positive VDA income × 30%
Add applicable surcharge and cess
Less eligible TDS credit
Pay balance or claim eligible refund

The actual return can be more complex, particularly when there are multiple assets, gifts, mining or staking receipts, business classification questions or non-resident transactions.

Worked Example: Profitable Trade

A user buys a token for ₹1,00,000 and later sells it for ₹1,50,000.

Sale consideration: ₹1,50,000
TDS at 1%: ₹1,500
Cost of acquisition: ₹1,00,000
Positive income: ₹50,000
Basic VDA tax at 30%: ₹15,000

The ₹1,500 deducted is not the final ₹15,000 tax.

Ignoring cess and any other adjustments for this simplified example:

Basic tax: ₹15,000
Less TDS credit: ₹1,500
Remaining basic tax: ₹13,500

The taxpayer must report the transaction and pay the balance through the applicable return and tax-payment process.

Worked Example: Loss-Making Trade

A user buys a VDA for ₹1,00,000 and sells it for ₹80,000.

Sale consideration: ₹80,000
TDS at 1%: ₹800
Economic result: ₹20,000 loss

The ₹800 may still be deducted because the TDS calculation is based on transaction value.

For Schedule VDA reporting under the old Act’s return framework, the official guidance states that the transaction is disclosed individually and a loss entry is reported as nil for the VDA income computation. Positive amounts are carried to the relevant return schedule.

If the taxpayer’s eligible tax credits exceed the final liability, the excess may be refundable after the return is filed and processed. The deduction does not disappear merely because the individual trade lost money.

Worked Example: High Turnover but Low Profit

A trader repeatedly buys and sells ₹1,00,000 positions.

Assume ten sales of ₹1,00,000 each:

Total sale turnover: ₹10,00,000
TDS at 1%: ₹10,000

Suppose the total positive taxable income after applying the applicable VDA rules is only ₹20,000:

Basic VDA tax at 30%: ₹6,000
TDS credit: ₹10,000
Potential excess before other liabilities: ₹4,000

The taxpayer cannot simply ask the exchange to refund the entire ₹10,000 as soon as the trading year ends.

The credit must be:

deposited against the correct PAN;
visible or otherwise substantiated;
claimed in the return;
reconciled with the reported VDA transactions;
and processed by the Income Tax Department.

Any refund remains subject to the taxpayer’s total return, not only the crypto section.

Can Crypto TDS Be Refunded?

Yes, excess TDS may be refundable when the taxpayer’s total eligible tax credits exceed the final income-tax liability.

A refund is not guaranteed merely because the trader made a loss on one sale. The full return may contain salary, interest, business income, capital gains, other VDA income, advance tax, self-assessment tax and other credits.

The usual process is:

Calculate the taxable result from every VDA transfer.
Report the required transactions in Schedule VDA.
Confirm the TDS credits in Form 26AS.
Review related information in AIS.
Claim eligible TDS in the ITR.
Pay any remaining liability or submit the return showing a refund.
E-verify the return.
Wait for processing.

A refund may be delayed where:

the deductor filed late;
the wrong PAN was used;
the claimed TDS does not appear in Form 26AS;
the exchange report differs from the return;
the taxpayer omitted transactions shown in AIS;
the bank account is not properly validated;
or the return is selected for additional review.

Form 26AS, AIS and TIS: What Is the Difference?

These records serve related but different purposes.

Form 26AS

Form 26AS primarily shows TDS and TCS information associated with the taxpayer’s PAN.

For a crypto seller, it helps answer:

Was tax actually deposited?
Which deductor reported it?
How much credit is available?
Does the amount match the exchange or P2P record?

Annual Information Statement

AIS is broader. It may contain TDS information and additional financial information reported to the tax department.

AIS also allows taxpayers to submit feedback where information is:

correct;
duplicated;
related to another person;
partially incorrect;
or otherwise disputed.

Taxpayer Information Summary

TIS is an aggregated summary derived from AIS information. It can display processed values and values accepted by the taxpayer or confirmed by the source.

The Income Tax Department explains that Form 26AS now focuses on TDS/TCS data, while AIS contains broader information and gives the taxpayer a feedback mechanism. It also warns that AIS may not contain every transaction and that taxpayers remain responsible for reporting complete and accurate information.

How to Reconcile Crypto TDS with AIS and Form 26AS

Do not wait until the final filing date to start matching the records.

Step 1: Download every platform statement

Obtain:

complete order history;
deposits and withdrawals;
crypto-to-crypto trades;
INR ledger;
fee report;
TDS report;
staking or reward history;
and wallet transfer records.

Use the full financial or tax year, not only the last quarter.

Step 2: Build a transaction ledger

For every disposal, record:

Field	What to enter
Date acquired	Original acquisition date
Date transferred	Date of sale, swap or other transfer
Asset	Token or NFT name
Quantity	Number of units transferred
Consideration	INR value received or attributed
Cost	Permitted acquisition cost
Fees	Record separately for review
TDS	Amount deducted
Deductor	Exchange, buyer or responsible entity
PAN reference	Whether your PAN was correctly used
Wallet or order ID	Supporting transaction reference

Step 3: Match Form 26AS

Compare the TDS total in your own ledger with the credits shown in Form 26AS.

Investigate:

missing deductions;
duplicate credits;
incorrect amounts;
incorrect deductor names;
or credits appearing in a different period.

Step 4: Review AIS and TIS

AIS values may not match your idea of “profit.” AIS may show gross transaction information, reported consideration or other information supplied by the reporting source.

Do not compare an AIS turnover figure directly with taxable profit and conclude that one must be wrong. First determine what the AIS field represents.

Step 5: Submit feedback where appropriate

Where AIS information is genuinely incorrect, use the portal’s feedback feature and retain the acknowledgement.

Submitting feedback does not automatically rewrite the source’s records. The source may need to confirm or correct the information.

Step 6: Contact the deductor

For a missing TDS credit, contact the exchange or P2P buyer and provide:

transaction date;
order number;
amount deducted;
PAN used;
and the relevant tax period.

Request confirmation that the filing has been submitted or corrected.

Step 7: Do not omit genuine transactions

A missing AIS entry does not mean the transaction can be ignored.

The Income Tax Department expressly states that AIS contains information presently available to it and may not include every transaction. The taxpayer remains responsible for reporting complete information.

Common Crypto AIS and Form 26AS Mismatches

TDS was deducted but no credit appears

Possible reasons include:

the exchange has not yet filed its statement;
the statement was filed late;
the seller’s PAN was incorrect;
the transaction was mapped to another user;
the filing was rejected;
or the credit relates to a later reporting period.

Keep the platform statement, invoice or order record showing the deduction. Raise the issue before filing where possible.

AIS turnover is much higher than expected profit

This is often caused by comparing gross transfers with net income.

A trader may buy and sell the same capital repeatedly. Gross reported turnover can therefore be many times larger than the money originally deposited.

Crypto-to-crypto swaps can also create multiple reportable transfer entries.

Exchange CSV and AIS use different dates

The exchange may use:

order execution time;
settlement time;
UTC time;
Indian Standard Time;
or the date on which the tax entry was posted.

Document the reason for any date difference rather than changing records without explanation.

P2P buyer used the wrong PAN

The seller may lose access to the intended TDS credit until the deductor corrects the filing.

The seller should contact the buyer promptly and preserve the P2P order, payment record and communication.

TDS credit appears, but the sale is missing from personal records

Do not assume the tax credit is free money.

Investigate whether:

an old account was used;
the exchange classified a swap as a transfer;
another person used the taxpayer’s PAN;
or the reporting source made an error.

TDS on DEX and Self-Custody Transactions

Decentralized exchanges present a serious operational challenge for India’s TDS system.

A DEX swap can involve:

a smart contract rather than a conventional company;
an automated liquidity pool;
pseudonymous wallet addresses;
no seller PAN;
no INR payment;
consideration entirely in another token;
and no intermediary automatically withholding tax.

The absence of an automatic deduction does not automatically remove the underlying tax consequences.

The statutory framework covers consideration paid in kind or in exchange for another VDA and requires the responsible person to ensure payment of tax before releasing consideration where cash is unavailable or insufficient.

The practical problem is that a wallet user may be unable to identify the legal recipient, determine residency or obtain a PAN from the counterparty or liquidity pool.

This is not a situation where a generic blog should tell every reader that no TDS applies. It is also unsafe to suggest that reporting income in the ITR automatically cures every earlier deduction failure.

A person with material DEX activity should obtain professional advice covering:

whether the relevant transfer involved a resident recipient;
who was legally responsible for the consideration;
whether the protocol or aggregator had an identifiable operator;
how the INR value should be established;
whether any tax could or should have been deposited;
and how the transactions should be disclosed.

Maintain wallet addresses, transaction hashes, timestamps, token quantities, gas fees, protocol names and INR valuation evidence.

TDS on Offshore Crypto Exchanges

An offshore exchange may not automatically deduct Indian TDS merely because its customer lives in India.

That does not produce one universal answer for every trade.

The correct analysis can depend on:

the residence of the VDA transferor;
the residence and role of the buyer;
whether the exchange acts as principal, broker or matching platform;
whether the user trades against an identifiable counterparty;
whether the consideration is paid to a resident;
and whether any Indian exchange-style arrangement exists.

Section 393’s 1% provision concerns consideration for a transfer paid to a resident. Payments involving a non-resident require separate analysis and cannot simply be pushed into the resident Form 141 workflow. Form 141 itself is available only for resident deductees.

Users should avoid both extremes:

“The offshore platform did not deduct, so nothing applies.”
“Every offshore transaction must automatically be filed through Form 141.”

Neither statement considers the actual counterparties and transaction structure.

At minimum, retain:

full trade history;
platform terms;
country and legal-entity information;
deposit and withdrawal records;
wallet addresses;
stablecoin conversions;
exchange rates used;
and evidence of the counterparty structure where available.

What Happens If the Seller Does Not Provide PAN?

A higher TDS rate can apply when valid PAN information is unavailable or other higher-rate provisions are triggered.

Under the previous Act, official guidance stated that failure to provide PAN could increase the deduction rate to 20%. It also described higher-rate consequences for certain non-filers, subject to the applicable provisions.

Under the new Form 141 process, the portal applies the rate required by the relevant provision, a higher rate where the new Act’s higher-deduction rules apply, or a rate specified in a valid lower-deduction certificate. The form interface can auto-populate a higher rate where PAN is unavailable.

A P2P buyer should therefore not casually enter a random PAN, a friend’s PAN or an unverified number supplied through chat.

Does Crypto TDS Prove That Crypto Is Legal in India?

No.

Tax collection and transaction reporting do not amount to government approval of:

a token;
an exchange;
a wallet;
a staking product;
a lending service;
a P2P counterparty;
or a specific investment scheme.

A transaction can create a tax obligation even if it also raises separate regulatory, contractual, consumer-protection or criminal-law concerns.

Similarly, the appearance of TDS on a platform statement does not prove that the platform is financially sound, FIU-compliant, secure or permitted to offer every advertised service.

TDS should be viewed as a tax mechanism, not a safety certification.

Reporting Crypto Income in Schedule VDA

For returns governed by the old Act, Schedule VDA requires transaction-wise reporting of income from VDA transfers.

Official Schedule VDA guidance identifies information such as:

date of acquisition;
date of transfer;
head of income;
sale consideration;
cost of acquisition;
and the resulting positive income.

The official guidance also states that where a transaction results in a loss, the amount is reported as nil for the schedule’s computation, and positive amounts are carried to the relevant income schedule.

The applicable ITR depends on the taxpayer’s complete income profile. A person should not select an ITR form based only on the presence of crypto.

Questions that may affect the correct return include:

Was the activity investment or business activity?
Did the taxpayer have business or professional income?
Were there foreign assets or foreign accounts?
Was the taxpayer a director or partner?
Did the taxpayer receive tokens as salary, rewards or gifts?
Was there mining, staking or lending income?
Did the taxpayer trade derivatives rather than directly transfer VDAs?

Records Every Crypto User Should Preserve

Keep records for each exchange, wallet and counterparty.

Identity and account records

exchange account email;
registered mobile number;
PAN verification;
KYC confirmation;
bank account used;
and account closure records.

Transaction records

order history;
trade confirmations;
contract notes;
P2P order receipts;
wallet addresses;
transaction hashes;
dates and timestamps;
token quantities;
and INR valuation.

Tax records

TDS statements;
Form 26AS;
AIS;
TIS;
Form 141 or older Form 26QE acknowledgement;
TRACES certificate;
advance tax payments;
self-assessment tax;
and filed ITR acknowledgement.

Cost records

acquisition price;
purchase date;
source of funds;
exchange fees;
gas fees;
and evidence for gifted or transferred assets.

Do not rely entirely on an exchange remaining accessible forever. Download records periodically and maintain a separate backup.

Common Crypto TDS Mistakes

Mistake 1: Treating 1% as the final tax

The deduction is a credit. The final VDA income calculation remains separate.

Mistake 2: Calculating TDS only on profit

The standard deduction is connected to consideration, not merely the gain.

Mistake 3: Ignoring losing trades

A loss-making sale may still have TDS and must still be reconciled.

Mistake 4: Assuming P2P platforms always deduct

A matching or escrow platform may not be the deductor. The direct buyer may still have to review the obligation.

Mistake 5: Using Form 26QE for a post-April 2026 transaction

For relevant transactions from 1 April 2026, the PAN-based form is Form 141 under the new Act.

Mistake 6: Claiming TDS not visible against the PAN without investigation

A platform screenshot may not be enough if the credit was never deposited or was reported against the wrong PAN.

Mistake 7: Treating an empty AIS as permission not to report

AIS may not contain every transaction.

Mistake 8: Reporting only INR withdrawals

Crypto-to-crypto transfers and other VDA disposals may also require review.

Mistake 9: Assuming DEX transactions are invisible

Blockchain records are permanent, and absence of automatic withholding does not by itself remove tax consequences.

Mistake 10: Mixing gross turnover with taxable income

AIS or exchange-reported consideration is not necessarily the same as profit.

A Practical Crypto TDS Decision Checklist

Before completing a transaction, ask:

Is a VDA being transferred to another person?
Is consideration being paid for that transfer?
Is the recipient an Indian resident?
Who is paying or crediting the consideration?
Is an exchange contractually handling the deduction?
Has the applicable annual threshold been exceeded?
Is the consideration cash, in kind or another VDA?
Does the payer have the seller’s correct PAN?
Did the transaction occur before or after 1 April 2026?
Which statement or form applies?
When is the deduction due?
How will the seller obtain proof of the credit?

After the transaction, ask:

Does the exchange or buyer’s statement show TDS?
Does Form 26AS contain the credit?
Does AIS show related information?
Do the gross values match the transaction ledger?
Is any information duplicated or incorrect?
Has AIS feedback been submitted where necessary?
Is every transfer recorded for Schedule VDA?
Has the final tax been calculated separately from TDS?

Frequently Asked Questions

Is crypto TDS still 1% in India in 2026?

Yes. The 1% rate continues under the new Income-tax Act, 2025 framework for qualifying consideration paid for a VDA transfer. The relevant post-April 2026 provision is Section 393(1), Table Serial Number 8(vi).

Is Section 194S still relevant?

It remains relevant to transactions and filings governed by the Income-tax Act, 1961, including the period up to 31 March 2026. For transactions from 1 April 2026, the corresponding provision is under Section 393 of the new Act.

What replaced Form 26QE?

For applicable PAN-based transactions from 1 April 2026, Form 141 replaces the separate Form 26QE workflow. An individual or HUF reporting a VDA deduction uses Schedule D.

What is the crypto TDS threshold for individuals?

The threshold is generally ₹50,000 for an individual or HUF meeting the specified conditions. A ₹10,000 threshold applies to other payers. These limits apply to the value or aggregate value during the relevant year, not independently to every trade.

Does TDS apply when I sell crypto at a loss?

It can. TDS is based on consideration rather than transaction profit. Excess eligible credit may be claimed through the ITR process if it exceeds the taxpayer’s final liability.

Does 1% TDS mean I have paid my crypto tax?

No. VDA income is calculated separately and is generally taxed at 30%, plus applicable surcharge and cess. The TDS amount is claimed as a credit.

Who deducts TDS in a direct P2P trade?

Where a resident seller transfers a VDA directly and no exchange handles the obligation, the buyer paying the consideration generally has to examine and fulfil the deduction requirement.

Does the seller file Form 141?

The deductor files the challan-cum-statement. In a direct P2P purchase, this may be the buyer rather than the crypto seller.

When is Form 141 due?

It must generally be filed within one month from the end of the month in which tax was deducted, with the deducted amount paid within 30 days from that month-end.

Does Form 141 apply when the seller is a non-resident?

No. Form 141 is for resident deductees. A payment to a non-resident requires separate analysis under the provisions applicable to non-resident payments.

Is a TAN required for Form 141?

Form 141 is accessed through PAN login. The PAN-based process is intended for the relevant individual or HUF transaction rather than requiring a separate TAN merely for that filing.

Can I claim a refund of crypto TDS?

You may claim eligible excess TDS through the Income Tax Return when the total tax credits exceed the final liability. The credit must be properly deposited, reconciled and claimed.

What should I do when TDS is missing from Form 26AS?

Contact the exchange or deductor, verify the PAN and transaction details, request correction where necessary and retain all evidence. Do not assume that an amount displayed as deducted by a platform has automatically become an available tax credit.

What if AIS shows the wrong crypto amount?

Identify whether the figure represents turnover, consideration or another reported value. If it is genuinely incorrect or duplicated, use the AIS feedback facility and preserve the acknowledgement.

Does TDS apply to crypto-to-crypto swaps?

Such transactions can fall within the VDA transfer framework. The law addresses consideration exchanged for another VDA and requires tax to be ensured where there is not enough cash to deduct it. Exchange and non-exchange mechanics may differ.

Are DEX trades exempt because there is no KYC?

No automatic exemption follows from the absence of KYC. The difficulty is determining the responsible person, recipient residency, PAN and value of consideration. Material DEX activity should be reviewed by a tax professional.

Can TDS be 20%?

A higher rate can apply when PAN is not furnished or another higher-rate provision is triggered. Under the previous Act, official guidance specified a 20% rate where PAN was not provided. The new Form 141 process similarly accommodates higher-rate rules under the Income-tax Act, 2025.

Final Crypto TDS Compliance Checklist

Before filing your return:

Download transaction reports from every exchange.
Export wallet and DEX histories.
Separate internal wallet movements from transfers to other people.
Calculate INR consideration for every disposal.
Record acquisition cost for each asset.
Match TDS reports with Form 26AS.
Review AIS and TIS.
Submit feedback for genuine AIS errors.
Follow up on missing PAN credits.
Separate pre-1 April 2026 transactions from later transactions.
Use the correct old or new statutory references.
Report required transactions in Schedule VDA.
Calculate final VDA tax separately from TDS.
Claim only eligible and supportable tax credits.
Preserve all records after filing.
Obtain professional advice for P2P, DEX, offshore, high-volume or non-resident activity.

Final Takeaway

Crypto TDS in India is not simply a 1% charge that completes a trader’s tax responsibility.

It is an upfront deduction linked to the value of a qualifying VDA transfer. It can arise on profitable trades, loss-making sales, direct P2P payments and consideration paid in another token. The person responsible for deducting it depends on the transaction structure, and the absence of an exchange deduction does not automatically remove the issue.

The most important 2026 distinction is the transaction date. Section 194S and Form 26QE remain relevant to the old period, while transactions from 1 April 2026 are governed by the Income-tax Act, 2025 framework, including Section 393 and Form 141 for applicable PAN-based filings.

After deduction, the taxpayer must still calculate VDA income, report the required transactions, reconcile Form 26AS and AIS, claim the available credit and pay any remaining tax. Where the credit exceeds the final liability, a refund may be claimed through the normal return-processing system.

For straightforward exchange trades, reliable records and regular reconciliation may be enough to avoid most mistakes. For direct P2P purchases, DEX swaps, offshore platforms, non-resident counterparties or large transaction volumes, professional advice is strongly recommended before filing or attempting to correct the position later.

Crypto TDS in India 2026: Who Deducts 1% TDS, Thresholds, P2P Rules and AIS Matching content