1% TDS Crypto India: What It Means for Traders and Tax Compliance

When you buy or sell cryptocurrency in India, a 1% TDS, a tax deducted at source on crypto transactions mandated by the Indian government now kicks in automatically. It’s not a tax on profits—it’s a withholding tax on every trade, no matter if you made money or lost it. This rule, enforced since July 2022 under Section 194S of the Income Tax Act, applies to all crypto exchanges operating in India, including WazirX, CoinDCX, and ZebPay. Even peer-to-peer trades above ₹50,000 per year are now tracked and taxed at 1%. If you’re trading crypto in India, this isn’t optional—it’s baked into every transaction.

The Indian crypto tax, a regulatory framework that treats cryptocurrency as a taxable asset doesn’t stop at TDS. You also pay 30% on gains, with no offset for losses. That means if you bought Bitcoin at $30,000 and sold it at $40,000, you owe 30% on the $10,000 profit—even if you lost money on other trades. The TDS on cryptocurrency, a mechanism to ensure compliance by collecting tax upfront is meant to bring transparency to a market that used to operate in the shadows. Exchanges now report every trade to the tax department, and your PAN card is tied to your wallet activity. There’s no way around it: if you’re trading, you’re being watched.

Many traders think they can avoid TDS by using foreign exchanges or P2P platforms. But that’s risky. The Indian government now shares data with global regulators under the Common Reporting Standard (CRS), and banks flag suspicious crypto-related transfers. Even if you use a VPN or a non-KYC exchange, your bank account can still get frozen if large crypto deposits appear without tax documentation. The Indian crypto regulations, a tightening set of rules designed to bring crypto under formal financial oversight are not going away—they’re getting stronger. The 1% TDS is just the first layer. More reporting, more audits, and more penalties are coming.

So what does this mean for you? If you’re trading regularly, keep detailed records of every buy and sell. Save your transaction IDs, timestamps, and exchange statements. Use accounting tools like Koinly or CoinTracker to auto-calculate your TDS and capital gains. Don’t wait until April to figure this out. The tax department already has your data—you just need to match it. And if you’re thinking of quitting crypto because of the tax burden, remember: this is the cost of playing in a legal market. The alternative—fines, account freezes, or worse—is far more expensive.

Below, you’ll find real cases, breakdowns, and warnings from traders who’ve been through this system. Some got lucky. Others got burned. The difference? Preparation.