India taxes Virtual Digital Assets at a flat 30% with no loss offsets or deductions. Learn how TDS, reporting rules, and new 2025 changes affect your crypto investments.
Crypto TDS India: What It Means and Why It Matters for Indian Crypto Users
When you trade crypto in India, Crypto TDS India, a tax deduction at source rule that requires exchanges to withhold 1% of every trade value. Also known as TDS on cryptocurrency, it’s not a new tax—it’s a collection mechanism. The government doesn’t ask you to pay more; it just makes sure a slice of your profit gets pulled out before you even see it. This rule, effective since July 2022, applies to every buy, sell, or swap on Indian exchanges like WazirX, CoinDCX, or ZebPay. If you trade $1,000 worth of Bitcoin, $10 gets auto-deducted. No invoice. No form. Just gone.
But here’s what most people miss: TDS on crypto, is not the final tax—it’s just an advance payment. Also known as crypto tax withholding, it’s like putting money in a jar for your annual tax bill. You still need to file returns and report gains or losses. If you lost money overall, you can claim that $10 back. If you made $50,000 in profit, that $10 is just a down payment. The real tax comes later, at 30% on net gains, plus cess. This system was built to track activity. Before TDS, the IRS-style reporting didn’t exist in India. Now, every trade leaves a digital trail. Exchanges report to the government. The government matches it with your income tax filings. And if you didn’t report? You’re on the radar.
It’s not just about compliance—it’s about clarity. Before TDS, Indian crypto users guessed their tax liability. Now, you know exactly how much was taken out. You can track it in your exchange dashboard. You can see it in your Form 26AS. You don’t need to calculate 1% manually. The system does it. But this also means you can’t ignore it. If you use foreign exchanges like Binance or Kraken and don’t report those trades, you’re still liable. TDS only applies to Indian platforms, but your tax obligation doesn’t stop at borders.
What about airdrops, staking rewards, or NFT sales? Those aren’t covered by TDS. They’re treated as income or capital gains separately. And if you’re buying crypto with INR from a friend? No TDS applies. But if you later sell it on an Indian exchange? Then TDS kicks in. The rule follows the platform, not the asset.
So what does this mean for you? If you trade regularly, keep a record of every TDS deduction. Save your trade history. Use free tools like Koinly or CoinTracker to sync your Indian exchange data. Don’t wait until March to figure it out. If you’re a long-term holder who only buys and holds? TDS still hits you on every sell. But if you never sell, it doesn’t touch you. The system only activates when money moves.
India isn’t banning crypto. It’s regulating it. TDS is the first real step toward bringing crypto into the formal economy. It’s not perfect. It doesn’t account for losses. It doesn’t differentiate between hobbyists and professionals. But it’s here to stay. And the more you understand how it works, the less it hurts.
Below, you’ll find real-world breakdowns of how crypto exchanges handle TDS, what happens when you trade across borders, how to claim refunds, and which projects are still active in India despite the rules. No fluff. Just what you need to know before you trade again.
