What is the 1% TDS on crypto?
The 1% TDS on crypto is a tax deducted at source (TDS) under Section 194S of the Income-tax Act, 1961. From April 1, 2026, the 1961 Act was replaced by the Income-tax Act, 2025, which moves this rule into its general TDS section (Section 393) but keeps the same 1% rate and thresholds. It applies when you transfer a virtual digital asset (VDA) such as Bitcoin or Ethereum. The payer deducts 1% of the consideration and deposits it with the government. You can then claim this TDS against your final tax liability.
This guide explains how the 1% TDS on crypto works in India, including who deducts it, the thresholds, how it appears in your tax records, and how to claim it. Always check the latest rules on the official Income Tax Department website, as thresholds and procedures may change. This is general information, not tax advice; consult a chartered accountant (CA) for your situation.
Who deducts the 1% TDS?
The responsibility to deduct TDS depends on the type of transaction:
- Exchange transactions: If you sell crypto on a centralized exchange, the exchange typically deducts the 1% TDS before crediting the sale proceeds to your account.
- Peer-to-peer (P2P) transactions: In a direct buyer-seller transaction, the buyer (the person paying for the crypto) is responsible for deducting TDS if the consideration exceeds the threshold. If the buyer is a specified person (explained below), the higher threshold applies and the buyer does not need a TAN; the tax is paid through a simpler challan-cum-statement. In a crypto-for-crypto swap, each side counts as a buyer, so both parties have TDS obligations.
For accurate application, refer to the official provisions of Section 194S and related rules.
Thresholds for 1% TDS on crypto
The 1% TDS applies only if the consideration for the transfer exceeds the following thresholds in a financial year:
- For specified persons: ₹50,000. A specified person is an individual or Hindu Undivided Family (HUF) with no business or professional income, or whose business turnover was no more than ₹1 crore (₹50 lakh for a profession) in the previous financial year. If the total consideration such a payer pays in the financial year does not exceed ₹50,000, no TDS is required. Once it does, 1% TDS applies.
- For others: ₹10,000. For any other payer (for example, a company, a firm, or an individual or HUF with turnover above those limits), TDS applies once the total consideration in the financial year exceeds ₹10,000.
These thresholds are based on the official Income Tax Department guidelines. Always verify the current thresholds on the official website.
How TDS appears in Form 26AS and AIS
When TDS is deducted, it is reported against your Permanent Account Number (PAN). You can view it in:
- Form 26AS: A consolidated tax statement that shows TDS deducted by deductors.
- AIS (Annual Information Statement): A more detailed statement that includes TDS and other financial transactions.
Under the Income-tax Rules, 2026, several form numbers change from the 2026-27 tax year (for example, Form 26AS becomes Form 168), but the statements work the same way.
Check these statements regularly to ensure that all TDS deducted on your crypto transactions is correctly reflected. If you notice discrepancies, contact the deductor or the tax department.
How to claim TDS against your final tax
The TDS deducted is not an additional tax; it is a prepayment of your tax. You can claim it against your total tax liability when filing your income tax return (ITR). Here’s how:
- Report your crypto income: Declare income from crypto transfers under the appropriate head (e.g., capital gains or business income) in your ITR.
- Claim TDS: Enter the TDS amount as per Form 26AS/AIS in the relevant schedule of your ITR.
- Calculate tax payable or refund: The TDS is adjusted against your tax liability. If TDS exceeds your liability, you can claim a refund.
Ensure you file your ITR within the due date to claim refunds smoothly.
Our crypto tax calculator estimates your 30% tax and subtracts the 1% TDS to show what is left to pay.
Common mistakes and risks
- Not verifying TDS in Form 26AS/AIS: If TDS is not reflected, you may not be able to claim it. Check regularly and follow up with the deductor.
- Assuming TDS is the final tax: TDS is only a prepayment. You must still report crypto income and pay any additional tax.
- Ignoring P2P transactions: In P2P deals, the buyer may not deduct TDS. As a seller, you are still liable to pay tax on gains; ensure TDS compliance or pay advance tax.
- Not maintaining records: Keep details of all crypto transactions, including TDS deducted, to reconcile with Form 26AS/AIS.
Also note that gains from transferring crypto are taxed at a flat 30% (plus any applicable surcharge and cess), and losses cannot be set off against any other income, including other crypto gains, or carried forward. TDS is a prepayment towards this tax, not an extra tax. See our crypto tax in India guide for the full rules.
Frequently asked questions
Is TDS on crypto refundable?
Yes, if the TDS deducted exceeds your total tax liability for the year, you can claim a refund by filing your income tax return.
Who deducts TDS on crypto in P2P transactions?
In P2P transactions, the buyer is generally responsible for deducting TDS if the consideration exceeds the threshold. If the buyer is a specified person, the buyer still deducts it, but the higher ₹50,000 threshold applies and no TAN is needed.
What is the threshold for 1% TDS on crypto?
The threshold is ₹50,000 for specified persons and ₹10,000 for others in a financial year. TDS applies only if the consideration exceeds these limits.
How do I check TDS deducted on crypto?
You can check TDS in Form 26AS and AIS available on the income tax e-filing portal.
Conclusion
The 1% TDS on crypto is a mechanism to track and tax virtual digital asset transactions. By understanding who deducts it, the thresholds, and how to claim it, you can stay compliant and avoid surprises. Always refer to the official Income Tax Department sources for the latest rules.