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

When you buy or sell crypto in India, a 1% TDS, a tax deducted at source on cryptocurrency transactions under India’s Income Tax Act. Also known as Tax Deducted at Source on digital assets, it’s not a new tax—it’s a collection mechanism. Since July 2022, every trade, whether you’re swapping SOL for ETH or cashing out BTC for INR, triggers a 1% deduction by the exchange. This applies to everyone, even if you’re not making a profit. It’s not optional. It’s not a suggestion. It’s enforced by law.

This rule ties directly to how the FIU-IND, India’s Financial Intelligence Unit that tracks crypto transactions for money laundering and tax evasion. Also known as Financial Intelligence Unit - India, it works with exchanges to monitor every crypto transfer above ₹10,000 in a single day. If you’re running a business that accepts crypto, you’re not just handling digital money—you’re handling a paper trail. The government doesn’t care if you think crypto is the future. It cares that you report it, track it, and pay what’s owed. And yes, that includes holding crypto as an asset, not just trading it. The 1% TDS isn’t your final tax bill—it’s an advance payment. You still need to file your annual income tax return and report all crypto gains or losses. If you sold ETH for a profit, that’s taxable under capital gains. If you bought a laptop with USDT, that’s also a taxable event. Many people assume the 1% covers everything. It doesn’t. It just makes sure the government sees your trades.

For businesses, this changes everything. You can’t legally accept crypto as direct payment for goods or services without following strict compliance rules. Even if you’re not selling crypto, if you take it as payment, you’re now a financial intermediary under Indian law. That means you must verify customer identities, log every transaction, and report suspicious activity. The penalty for skipping this? Fines, frozen bank accounts, or worse. Meanwhile, retail traders are stuck in a gray zone: they’re taxed on every trade, yet still can’t use crypto to pay bills or buy groceries legally. The system isn’t designed to support crypto adoption—it’s built to control it.

What you’ll find in the posts below are real, unfiltered stories from people who’ve been caught in this system. Some lost money because they didn’t know TDS was deducted automatically. Others ran into trouble when their bank flagged their crypto deposits. There are guides on how to file crypto taxes correctly, what exchanges report to FIU-IND, and how to avoid common mistakes that lead to notices from the tax department. This isn’t theory. It’s what’s happening right now, on the ground, in India.