Definition
1% TDS on Crypto
India levies a 1% tax deducted at source on the transfer of virtual digital assets above specified thresholds, creating an audit trail of crypto transactions. This is informational, not advice.
When a VDA is transferred, a 1% TDS is deducted on the consideration above prescribed threshold limits, typically by the exchange or buyer. The deducted amount is credited against the seller's tax liability and reflected in their tax records.
The TDS applies on each transfer, so active traders see it deducted repeatedly, which can lock up capital and reduce trading frequency. Its main policy purpose is to track and trace crypto transactions, not to raise large revenue.
This is informational only and not investment advice. Crypto/VDAs are high-risk and volatile; the 1% TDS is separate from, and additional to, the 30% tax on gains.
Related terms
- Virtual Digital Asset (VDA)Virtual Digital Asset is the term Indian tax law uses for cryptocurrencies, NFTs and similar tokens, bringing them under a specific, stringent tax regime. This is informational, not investment advice.
- 30% Crypto Tax (India)India taxes income from transferring virtual digital assets at a flat 30% rate, with no deductions other than cost of acquisition and no set-off of losses. This is informational, not advice.
- Crypto ExchangeA crypto exchange is a platform where users buy, sell and trade cryptocurrencies; Indian exchanges register as reporting entities and deduct 1% TDS. This is informational, not advice.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.