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

When you trade crypto in India, a 1% TDS, a tax deducted at source on cryptocurrency transactions, mandated by the Indian government since July 2022 automatically gets pulled from your trade. It’s not a final tax—it’s a withholding. Think of it like a down payment on your crypto gains, collected by the exchange before you even see your coins. This rule applies to every buy or sell order over ₹10,000 in a single financial year, no matter if you’re trading Bitcoin, Ethereum, or a meme coin. It doesn’t matter if you’re making money or losing it. The tax still gets taken out.

The Indian crypto regulations, a framework that treats digital assets as taxable property rather than currency force exchanges like WazirX, CoinSwitch, and ZebPay to act as tax collectors. That means if you trade ₹50,000 worth of SOL, ₹500 gets sent to the government before you even get your tokens. You can claim this back later when you file your income tax return—if you have proof of losses or if your total income puts you in a lower bracket. But most people don’t track this well. They assume it’s just a fee, not a tax credit. And that’s where they lose money.

This rule doesn’t just affect traders. It hits miners, stakers, and even people who get paid in crypto. If you sell crypto you mined or earned from airdrops, the 1% TDS still applies. Even if you swap one token for another—say, USDT to SOL—it’s treated as a taxable event. The government doesn’t care if you didn’t cash out to INR. The moment you trade, the tax triggers. And while the rule was meant to bring transparency, it’s created confusion. Many users think they’re done once TDS is taken. They forget they still need to report gains and losses separately. Some even avoid trading altogether, fearing audits or penalties.

What’s missing? Clear guidance on how to calculate cost basis across multiple buys, or how to handle cross-chain swaps. There’s no official tool from the income tax department. Exchanges don’t always provide clean reports. And if you use a foreign exchange like Binance or Bybit? The TDS rule still applies if you’re an Indian resident. The government tracks it through bank links and KYC data. Ignoring it isn’t an option anymore.

Below, you’ll find real reviews and breakdowns from Indian traders who’ve dealt with this system firsthand. Some lost money because they didn’t know TDS could be claimed back. Others got caught by hidden fees disguised as tax. A few even got flagged by the tax department for not filing properly. These aren’t theoretical warnings. These are lessons from people who’ve been there. Whether you’re new to crypto or have been trading for years, understanding how 1% TDS works—and how to use it to your advantage—is no longer optional. It’s the difference between keeping your profits and paying more than you owe.