Binance P2P and TDS in India: you still owe the tax, wherever you trade

Trading on Binance P2P, or on any peer-to-peer or offshore platform, does not change your tax in India. If you are a resident, the 1% TDS rule on transfers of virtual digital assets still applies, and in a peer-to-peer deal the responsibility to deduct sits with the buyer, not with the platform. Your gains are still taxed at a flat 30% plus surcharge and cess, and every sale still goes in Schedule VDA in your income tax return.

The rule is about the transaction, not the app. The 1% TDS under section 194S (now covered by section 393 of the Income-tax Act, 2025) applies when a resident is paid for transferring a VDA, above the yearly thresholds. If a platform does not deduct it for you, the duty does not disappear. It lands on the person paying. If you see anyone online suggesting P2P as a way to avoid TDS, they are pointing you toward a tax problem, not away from one.

The question people actually ask

I get versions of this question all the time. "If I sell on P2P, there's no TDS, right?" Or: "My offshore exchange didn't deduct anything, so I don't have to show it?"

I understand why people ask. 1% of every sale feels like money taken away, even though it is credited back against your tax. And when an app does not deduct it, it is easy to assume there was nothing to deduct.

But Indian tax law does not care which screen you used. It cares who paid whom, for what, and whether they are resident in India. From the first week of Unocoin, we learned that you can't run from the government. You have to deal with them. That applies to platforms, and it applies to every person filing a return.

Who deducts TDS in a P2P trade

Section 194S says the payer deducts 1% of the consideration paid to a resident for the transfer of a VDA. Under the Income-tax Act, 2025, which applies from 1 April 2026, this is covered by section 393(1), Table Sl. No. 8(vi). The rate is still 1%.

The question is who the payer is.

• On a platform that handles the trade, the exchange may deduct the TDS on the seller's behalf.
• In a peer-to-peer deal, the buyer pays the seller directly, so the buyer is responsible for deducting the TDS and depositing it.

So if you buy Bitcoin from someone through a P2P listing, and your yearly purchases cross the threshold, you are the one who should be deducting TDS. Most people in that position have never deducted tax from anyone in their life. That is exactly why P2P is harder to keep clean, not easier.

The thresholds matter. No TDS applies if total consideration in a financial year does not exceed:

• ₹50,000, where the payer is a "specified person" (an individual or HUF with business turnover up to ₹1 crore or professional receipts up to ₹50 lakh in the previous year, or with no business or professional income), or
• ₹10,000, for any other payer.

If the seller does not furnish a PAN, TDS is 20%. And if payment is made in kind or in another VDA, the payer must make sure the tax is paid before releasing it. These rules are detailed and easy to get wrong, which is a good reason to involve a CA before you trade P2P at all.

Your 30% tax applies regardless

TDS is the advance collection. The tax itself is separate.

Income from transferring a VDA is taxed at a flat 30% under section 115BBH, plus applicable surcharge and 4% cess. Only the cost of acquisition is deductible. No other expense or allowance. A loss on one asset cannot reduce the tax on a gain from another, and losses cannot be carried forward.

None of that depends on where you traded. A gain made on an offshore exchange is taxed the same way as a gain made on an Indian platform. If TDS was not deducted, you still owe the full tax on the gain, and you have no TDS credit to set against it.

Reporting in Schedule VDA

Every sale, swap and spend goes in Schedule VDA, in ITR-2 or ITR-3. ITR-1 cannot be used with VDA income. For each transfer you report the date acquired, the date transferred, the head of income, the cost of acquisition, the sale value and the income.

If TDS was deducted, it shows in Form 26AS and your AIS. Enter it in the tax-paid section so it is credited. Our Schedule VDA guide walks through each field.

And the department is seeing more. Finance Act 2025 added section 285BAA, requiring prescribed entities to report crypto-asset transactions, and CBDT guidance under the Crypto-Asset Reporting Framework has platforms reporting 2026 transactions in rupees in Form 167. Platforms must also confirm users' tax residency. Your return should agree with what is reported about you.

What FIU-IND has done about offshore platforms

A separate rulebook applies to the platforms themselves. Since March 2023, businesses that exchange, transfer or safeguard VDAs for others are reporting entities under the PMLA and must register with FIU-IND. The obligation depends on the activity, not on whether the company has an office in India.

FIU-IND has enforced this. On 19 June 2024 it imposed a penalty of ₹18.82 crore on Binance under section 13 of the PMLA. Reports say Binance resumed serving India after that penalty. On 31 January 2025 it penalised Bybit ₹9.27 crore. On 9 September 2026 it issued notices to 15 offshore platforms and sought takedown of their apps and websites. The stated ground in these actions is PMLA non-compliance.

I am not telling you which platform to use. Whether a platform is registered today is something you should check yourself on FIU-IND's published list, not on a blog post.

If no TDS was deducted on your past trades

Some readers will recognise themselves here: a few P2P buys or offshore sales last year, no TDS anywhere, and nothing reported. Do not panic, and do not ignore it.

The tax on your gains is owed whether or not TDS was deducted. Every sale still belongs in Schedule VDA. If you were the buyer in P2P deals above the threshold, there may also be a question about TDS you should have deducted. Take your full transaction history to a CA and ask how to put it right. Correcting your own filing, early, is the strongest position you can be in, especially now that platforms report transactions in detail.

Why registered platforms make this simpler

On a platform that is registered with FIU-IND and deducts TDS, three things happen without you having to think about them: TDS is deducted and deposited against your PAN, the deduction shows up in your 26AS, and your transaction history is available to download when you file.

On a P2P deal, you may have to do all three yourself, with a stranger, for every trade. That is not a reason to fear P2P. It is a reason to be honest about the work it creates.

Unocoin is registered with FIU-IND as a reporting entity under the PMLA, and deducts TDS where the law requires it. Our is Unocoin safe page lists what you can check about any platform, including us.

For the full TDS rules, with how to see it in 26AS and claim it back, read our 1% TDS guide. General information, not tax advice; check your situation with a CA.

Keep reading

Sources

• TDSMAN, TDS on VDAs under section 393(1)
• Taxguru, scheme of taxation of VDAs (115BBH, 194S, specified person)
• ClearTax crypto taxation guide (surcharge and cess)
• Business Today, Budget 2025 VDA changes (285BAA)
• Inc42, CBDT's CARF guidance
• FIU-IND order on Binance (19 June 2024)
• FIU-IND order on Bybit (31 Jan 2025)
• The Block, India seeks takedowns of 15 platforms (9 Sep 2026)