Awaiting chartered accountant review
This explanation is informational. It has not yet been signed off by a named chartered accountant, so do not rely on it for your return. Your situation may need individual advice.
01Pick your tax period
Transfers up to 31 March 2026 fall under the Income-tax Act 1961 (FY 2025-26, filed as AY 2026-27). Transfers from 1 April 2026 fall under the Income-tax Act 2025 (Tax Year 2026-27). For TDS, the law that applies follows the date of the credit or payment, not the date you file.
Tax Year 2026-27 (current)
Income-tax Act, 2025 · Applies to transfers from 1 April 2026
- Income from transfer
- Section 194(1), Table item 4
- TDS
- Section 393(1), Table item 8(vi); thresholds in section 393(4)
- Deductor filing
- Form 141, Schedule D (specified individual/HUF deductors only)
For TDS the applicable law follows the date of the credit or payment, not the date you file.
30%
Tax on income from VDA transfers
Income from transferring a virtual digital asset is taxed at 30%, plus applicable surcharge and cess. Only the cost of acquisition is deductible. Losses from one VDA cannot be set off against other income or other VDAs, or carried forward. Moving rupees to your bank is not itself a taxable event; the transfer of the asset is.
1% TDS
Withholding on applicable transfers
1% of the consideration (not the profit) is withheld on applicable VDA transfers once annual thresholds are crossed: Rs 50,000 for qualifying individuals and HUFs, Rs 10,000 for other payers. These thresholds are not tax-free profit allowances. TDS is a credit against your final tax when reported correctly. An Indian exchange usually deducts it; on other routes the payer may have to.
Separate
Fees, withholding and final tax are different things
Exchange trading fees are the platform's charge. TDS is tax withheld and credited to you. Your final liability is worked out when you file. Keep gross sale value, fees, withholding and net proceeds separately in your records and reconcile them against the exchange's TDS report.
This explanation is informational and has not yet been signed off by a named chartered accountant. Swaps, own-wallet transfers, gifts, rewards, staking, airdrops, mining, derivatives and cross-border situations need individual advice. A provider's FAQ describes that provider's practice, not an authoritative tax classification.
02Income tax and TDS are different things
The two amounts side by side
- Income tax on VDA transfers
- 30% of the income (sale value minus cost of acquisition), plus surcharge and cess. Worked out when you file. Only the cost of acquisition is deductible.
- TDS (withholding)
- 1% of the consideration, the sale value, not the profit. Taken at the time of the transfer and credited to your PAN.
- Exchange fees and GST
- The platform's charges. Neither tax nor a tax credit.
- TDS is taken even if you sold at a loss. You claim it back against your final tax, or as a refund, when you file.
- A loss on one VDA cannot be set off against gains on another VDA, against other income, or carried forward.
- The Rs 50,000 and Rs 10,000 figures are TDS thresholds, not tax-free allowances. Income below them is still taxable at 30%.
03Who deducts TDS
The duty falls on whoever pays the consideration for the transfer. How that plays out depends on where you trade:
Typical situations
- Indian exchange order book
- The exchange usually deducts TDS and files the return, and the credit appears against your PAN.
- Peer-to-peer (P2P) trades
- The buyer may be responsible for deducting. Check what the platform says it does; if nobody deducts, the duty does not disappear.
- Offshore exchange
- An offshore platform may not deduct at all. The Indian payer may have to, and you still owe the income tax.
- Specified individuals and HUFs
- Some individual and HUF payers file a simplified statement instead of getting a TAN: Form 26QE up to 31 March 2026, Form 141 Schedule D from 1 April 2026.
A provider's FAQ explains how that provider handles TDS. It is not an authoritative tax classification for your situation.
04Reconcile before you file
- 1
Download the exchange's annual trade statement and TDS report for the period.
- 2
Compare the TDS shown by the exchange with the credits in your Form 26AS and Annual Information Statement (AIS) on the income-tax portal.
- 3
If a credit is missing or wrong, raise it with the exchange first. The deductor has to correct its return; you cannot correct it yourself.
- 4
Work out income per transfer: sale value minus cost of acquisition. Keep fees, GST and TDS in separate columns.
- 5
Report VDA income in the schedule for virtual digital assets in your return, and claim the TDS credit.
05When to get professional advice
Talk to a chartered accountant before filing if any of these apply to you:
- coin-to-coin swaps, or transfers between your own wallets on different platforms
- staking rewards, Earn products, airdrops, mining or referral rewards
- gifts of crypto received or given
- futures or options on crypto, on an Indian or offshore platform
- trading on offshore or P2P platforms where TDS may not have been deducted
- you are an NRI, or changed tax residence during the year
- a mismatch between your exchange statement and Form 26AS or AIS that you cannot resolve
06Why a platform may ask about your tax residence
On 24 July 2026 the Income Tax Department released crypto-asset reporting guidance (section 509, Rules 241-244, Form 167). It places due-diligence and reporting duties on reporting service providers, on a calendar-year cycle that differs from your income-tax period. It is why an exchange may ask for tax-residence details. It does not mean every retail user files Form 167.
Official sources
- Income Tax Department, VDA taxation overview (1961 Act references)
- Income-tax Act 2025, section 393
- Income Tax Department, Form 141 FAQs
- Income Tax Department guidance note, 24 July 2026
Last updated 10 Oct 2026. Version 2026-10-09.1. What FIU-IND registration means