VDA crypto transfers par 1% TDS. Exchange deducts. Threshold ₹10K/₹50K. P2P also covered. Adjusted against 115BBH 30% final tax in ITR.
Section 194S (effective July 1, 2022) VDA cryptocurrency TRANSFERS par 1% TDS deduct karta hai. KEY: (1) 1% on consideration paid. (2) Buyer/Exchange/Broker deducts. (3) Threshold: ₹10,000 (specified persons - individuals carrying business), ₹50,000 (others). (4) On EACH TRANSACTION. (5) Form 26QE quarterly + Form 16E to seller. (6) Applies to: Bitcoin, Ethereum, all VDAs + NFT transfers.
(1) EXCHANGE TRANSFERS (WazirX, CoinDCX, ZebPay, Binance India): exchange auto-deducts 1% before crediting INR to seller. Seller sees ₹X minus 1%. (2) P2P TRANSFERS: buyer must deduct 1% before sending INR. CHALLENGE: many P2P buyers don't comply, creating risk for seller. EXCHANGE preferred for compliance + TDS credit.
194S = ADVANCE TDS (1% at transaction time). 115BBH = FINAL TAX (30% on yearly VDA gains). Adjustment: TDS credited against final 30% tax in ITR. EXAMPLE: ₹50L crypto transactions yearly. (1) 194S TDS: ₹50K total. (2) 115BBH on gains (say ₹10L profit): ₹3L. (3) Final ITR: ₹3L - ₹50K = ₹2.5L payable.
(1) TDS deducted appears in Form 26AS + AIS. (2) In ITR Schedule TDS (Other Sources): claim 194S TDS credit. (3) Adjust against final 115BBH tax computation. (4) Refund possible if TDS exceeds final tax (rare). MAINTAIN: Form 16E from exchange/buyer + transaction-wise records.
Indian regulators struggle with foreign exchanges (Binance International, Coinbase Global). Section 194S compliance: (1) Foreign exchange may not deduct TDS — Indian residents must self-disclose + pay tax. (2) Many use Indian exchanges (WazirX, CoinDCX) for compliant TDS. (3) ED + Income Tax Department investigating foreign exchange Indian users. STRATEGIC: Indian-domiciled exchanges for compliance.