1% TDS on crypto in India in 2026, exchange trades, P2P deals, and how to track it without missing credits

Ever sold crypto for ₹1,00,000 and felt that ₹1,000 got sliced off like a toll gate you didn’t agree to? That’s 1% TDS for VDAs, and in 2026 it still trips up regular traders, long-term holders, and even people doing “just one” P2P deal. The bigger issue is not the 1% itself, it’s the messy trail: multiple exchanges, offshore platforms that don’t deduct, P2P buyers who forget (or don’t know) they must deduct, and then tax credits that don’t show in Form 26AS/AIS when you need them for ITR. This guide is compliance-first and practical, for crypto users in India who want their TDS credits to actually get counted. What “1% TDS on crypto” means in India (Jan 2026 status) As of January 2026, the crypto tds india rule remains under Section 194S: 1% TDS applies on consideration when there is a “transfer” of a Virtual Digital Asset (VDA). Budget talk happens every year, but as of now there is no confirmed change in the rate. If you want a structured summary of how VDA taxes and TDS fit together, see PwC’s VDA taxation framework note. A few points people mix up (and then the reconciliation becomes a headache): TDS is not your final tax. It’s a credit. Your gain, if any, still gets taxed under the VDA regime (the well-known flat rate structure), and TDS just reduces what you need to pay later, or increases refund. TDS is on gross consideration, not profit. If you sell for ₹50,000, TDS is typically ₹500 even if your actual profit is tiny, or even negative. Thresholds matter, but don’t overtrust them. The law uses different limits (commonly ₹10,000, and ₹50,000 for “specified persons” such as certain individuals and HUFs). Platforms may still deduct in more situations for operational simplicity, so your own logs must be the main truth. If you also want the broader regulatory context (because tax rules sit inside that larger story), this explainer helps: Understanding crypto TDS tax in India. Where 1% TDS gets deducted in real life: exchanges, offshore, and P2P On an Indian exchange, the process is usually “invisible”: you place a sell order, the exchange deducts 1% from the sale value (or adjusts settlement), deposits it as TDS against your PAN, and later you see it in 26AS/AIS. Sounds clean, but the small print is where mismatches start. Exchange trades (including crypto to crypto)Many users assume TDS only applies when INR comes back to the bank. That assumption breaks fast. A crypto to crypto swap is still a “transfer” under VDA logic, and platforms often compute an INR equivalent for the trade value and apply TDS mechanics accordingly (method differs by platform). Fees also confuse reporting: your “net received” is not the same as “gross consideration”, and TDS follows gross. Stablecoin legs are common too, so keep your accounting consistent for USDT conversions and P2P USDT flows. This background piece is useful if you’re mapping trades around stablecoins: India’s TDS on stablecoin transactions. Offshore exchanges and DeFi flowsOffshore platforms generally don’t deduct Indian TDS for your PAN. That doesn’t make the transfer “non-taxable”, it just means no TDS credit will appear, and you may need to pay tax through advance tax or self-assessment based on your gains reporting. From a tracking view, treat offshore as “self-reported with zero TDS”, unless you have an actual Indian deductor. P2P deals (the most missed TDS area)In a direct P2P buy-sell (wallet to wallet, or exchange P2P desk where you’re dealing with another user), the buyer is generally the one who must deduct 1% TDS and deposit it, then issue the TDS certificate (often the practical evidence you’ll need). If the buyer doesn’t deduct, you don’t get credit later, even if you reported income correctly. For a plain-language explanation of Section 194S handling and common cases, see ClearTax’s TDS on crypto guide. A tracking system that actually works: spreadsheet template, 26AS/AIS matching, and fixing missing credits Think of TDS like a courier slip, if you don’t keep the slip number, you will keep arguing that you sent the parcel. Your goal is one master ledger that survives multiple exchanges, multiple wallets, and a few careless P2P counterparties. Use one master spreadsheet (not one per exchange) Keep a single sheet for all taxable transfers (spot, futures settlement where relevant, swaps, P2P sells). Don’t log mere deposits and withdrawals here, keep those in a separate “movement log” so you don’t double-count. Here’s a clean template you can copy into Google Sheets or Excel: Trade ID / Txn hash Date & time (IST) Counterparty / exchange Gross consideration (₹) TDS deducted (₹) Net received (₹) Counterparty PAN (if P2P) 26AS/AIS reference EXCH-18492 2026-01-12 14:06 Indian exchange A 100000 1000 98950 NA 26AS Q3 FY25-26 line 12 A few practical rules (small, but they save you later): Trade ID must be unique. If one platform shows “Order ID” and another shows “Trade ID”, pick one and stick to it, add the other in notes if needed. Always store gross consideration in INR. Even if the trade is BTC/USDT, record the INR value used by the platform, or your own conversion basis with supporting screenshot. TDS is a separate field, never mix it into fees. Fees are fees, TDS is tax credit, auditors and notices treat them differently. Monthly reconciliation: don’t wait till July Once a month (yes, even if you’re not a heavy trader): Download exchange trade history and the exchange’s TDS report (many provide a “194S” report). For P2P, collect chat confirmation, bank narration screenshot, and wallet transfer hash. Also ask for the TDS certificate if they deducted. Log in to the income tax portal and pull 26AS/AIS entries, then fill the “26AS/AIS reference” column with the quarter and row reference you see. Match totals: spreadsheet TDS total for the period should broadly match 26AS/AIS TDS credited, allowing for timing delays. When TDS is missing or not credited: what to do (without panic) This usually falls into one of these buckets: TDS not deducted at all (common in P2P, offshore): You still report the VDA income and tax as applicable. For P2P, follow up with the buyer (they are the deductor in many cases), and request they deposit TDS and provide the certificate. Keep proof that you asked. TDS deducted but not deposited: This is the worst feeling because your money got cut but credit doesn’t show. Ask the deductor (exchange or P2P buyer) for the challan details and whether they filed the correct statement, then request a correction filing if PAN or amount was wrong. Preserve your order history and settlement proof. Deposited but mapped wrong (PAN mismatch, wrong quarter, wrong amount): Ask for a correction statement from the deductor. In parallel, keep your evidence pack ready (trade confirmation, bank proof, screenshots), because credits usually get accepted only when the deductor fixes reporting. Claiming TDS credit in ITR, and avoiding double-counting across platforms When filing ITR, report VDA income in Schedule VDA (as applicable for your ITR form), and claim the TDS credit in the relevant TDS schedule based on what appears in 26AS/AIS. Don’t claim “expected” TDS that isn’t reflecting yet, because it often triggers mismatch, then you waste weeks replying. To avoid double-counting: if you moved BTC from Exchange A to Exchange B, log it only in the movement log, not as a taxable transfer. The taxable event is the actual “transfer” by sale, swap, or spend, not the same asset walking between your own wallets. Conclusion The 1% TDS rule isn’t going away in 2026, and the safest approach is boring but effective: track gross value, track deducted TDS, and match it with 26AS/AIS before you file. Once your master sheet is clean, even multi-platform trading becomes manageable, and you stop leaving credits behind like forgotten change in a pocket. Disclaimer: This article is informational and not legal or tax advice. For your specific facts (especially P2P and offshore activity), consult a qualified tax professional.