The rule
Under section 194S, the person paying for a virtual digital asset must deduct 1% of the consideration and deposit it with the government. On an exchange, the platform deducts it from your sale proceeds, so the money you receive is already net of TDS.
- Threshold: TDS applies once payments in a financial year pass ₹50,000 for "specified persons" (broadly, individuals and HUFs whose business turnover or professional receipts are below the audit limits) and ₹10,000 for everyone else.
- It is on the sale value, not the profit. You pay 1% even if you sold at a loss.
- It is credited to your PAN. It appears in Form 26AS and your Annual Information Statement (AIS), and you claim it when you file.
- It adjusts against your final tax. If TDS is more than the tax you owe, for example after a loss, you get the difference back as a refund when you file.
Government guidance on how 194S applies in practice is in CBDT Circular No. 13 of 2022 (22 June 2022).
Sources: Income Tax Department of India and the Finance Act 2022 (inserted sections 115BBH, 194S and 2(47A) into the Income-tax Act, 1961). The Income-tax Act, 2025 applies from 1 April 2026 and renumbers sections; the rules described here are carried over in substance, but check the current numbering with your CA.
General information, not tax or legal advice. Rules change and your situation may differ. Check your own return with a chartered accountant.
Worked example
You sell Bitcoin for ₹2,00,000 that cost you ₹1,50,000. TDS is 1% of ₹2,00,000 = ₹2,000. Your tax is 30% of ₹50,000 = ₹15,000 plus ₹600 cess = ₹15,600. You have already paid ₹2,000 through TDS, so ₹13,600 is left to pay.
If you sold the same Bitcoin for ₹1,20,000, you made a loss. Your tax is zero, but ₹1,200 TDS was still deducted. You claim that ₹1,200 back through your return.
Check your own sale
Thresholds follow section 194S as summarised above. The platform decides how it applies TDS to your account. Illustrative, not tax advice.
Common questions
Is TDS on Bitcoin charged on profit or sale value?
On the sale value. It is 1% of the consideration, regardless of whether you made a profit.
How do I get TDS back?
TDS is credited to your PAN. File your return, claim it in the tax-paid section, and any excess over your actual tax is refunded.
Where can I see the TDS deducted?
In Form 26AS and your Annual Information Statement on the income tax portal.
Risk: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Everything here is education, not investment, tax or legal advice.