Section 194S Crypto – What You Need to Know

When dealing with Section 194S crypto, the Indian tax provision that mandates a 1% tax deducted at source (TDS) on every cryptocurrency transaction. Also known as crypto TDS, it affects anyone buying, selling, swapping, or earning digital assets in India. Crypto tax, the broader framework that covers income, capital gains, and GST on digital assets works hand‑in‑hand with this rule. In practice, Capital gains tax, the levy on profit from the sale of assets held longer than a day still applies, so traders must calculate both the TDS and any gains or losses. This creates a three‑part compliance loop: Section 194S crypto requires a TDS cut, crypto tax demands accurate reporting, and capital gains tax forces precise profit calculations.

Because the rule kicks in at the point of sale, platforms acting as brokers must withhold the 1% and remit it to the government. That means every exchange, wallet service, or peer‑to‑peer matchmaker becomes a tax collector. The withheld amount appears on the trader’s Form 26AS as “Tax Deducted at Source on Crypto Transactions,” which you’ll need when filing your annual return. If you’re an Indian resident holding crypto on foreign exchanges, the rule still applies as long as the transaction is routed through an Indian‑registered entity. Ignoring the TDS can trigger penalties, interest, and even a notice from the Income Tax Department.

How to Stay Compliant and Optimize Your Crypto Earnings

First, track every inbound and outbound crypto move in a spreadsheet or dedicated tax app. Record the date, asset, USD/INR value, and the 1% TDS amount shown on the transaction receipt. Second, differentiate between short‑term and long‑term holdings; the former is taxed as ordinary income, while the latter enjoys a lower rate under capital gains rules. Third, reconcile the TDS shown on Form 26AS with your own logs – any mismatch could raise a red flag. Finally, consider the impact on your overall tax liability: the 1% TDS can be claimed as a credit against your final tax bill, reducing the amount you owe at year‑end. By treating Section 194S crypto as a built‑in part of your trading workflow rather than an afterthought, you’ll avoid surprise liabilities and keep more of your crypto profits.

Below you’ll find a curated set of articles covering everything from stablecoin mechanics to cross‑chain bridges, exchange reviews, airdrop guides, and risk‑management tips. These resources will help you understand the full crypto landscape while staying on top of the tax obligations introduced by Section 194S crypto.