Section 194S: TDS on Crypto & Virtual Digital Assets (VDA) – FY 2025–26 Guide
To track crypto transactions, the government introduced Section 194S, mandating 1% TDS on transfer of Virtual Digital Assets (VDAs). This applies even if: Transaction is loss-making Trade is peer-to-peer Exchange is foreign Applicability of Sec...
To track crypto transactions, the government introduced Section 194S, mandating 1% TDS on transfer of Virtual Digital Assets (VDAs).
This applies even if:
Transaction is loss-making
Trade is peer-to-peer
Exchange is foreign
Applicability of Section 194S
| Condition | Requirement |
| Asset | Crypto / NFT / VDA |
| Seller resident | Yes |
| Consideration | In cash or kind |
Threshold Limit
| Category | Threshold |
| Specified person | ₹50,000 |
| Others | ₹10,000 |
TDS Rate
1% of transaction value
PAN not provided → 20%
Example: Crypto Trade
- Sale value: ₹2,00,000
👉 TDS @1% = ₹2,000
👉 Net received = ₹1,98,000
P2P Transactions (High Risk)
Buyer must deduct TDS
Deposit directly to government
Report in Form 26Q
Most notices arise from missed P2P TDS.
Interaction with Section 115BBH
Profit taxed @30%
No deduction of expenses
TDS is only a tracking mechanism
Internal Links (WonderTax)
Crypto Taxation in India
https://wondertax.in/crypto-tax-indiaIncome Tax Filing Services
https://wondertax.in/income-tax-filing
CTA – WonderTax
👉 Trading crypto and confused about TDS & tax reporting?
