The 1% crypto TDS on P2P trades, explained
Section 194S requires 1% TDS on the transfer of a virtual digital asset. On an exchange the platform usually deducts. In a peer-to-peer trade the buyer deducts 1%, pays the seller 99%, deposits the TDS and files Form 26QE within 30 days from the end of the month of deduction.
TDS is the part of India's crypto regime that P2P traders most often get wrong — not because it is complicated, but because there is no platform quietly doing it for them.
What it is, and is not
The 1% is not a tax on your profit. It is deducted on the transaction value and later credited against whatever you actually owe. If your final liability is lower, the excess comes back as a refund.
1% crypto TDS calculator (Section 194S)
On a P2P trade there is no exchange to deduct for you — the buyer deducts 1% and pays the seller 99%.
Informational only, not tax advice. Thresholds are per financial year, per counterparty. Confirm your own position with a qualified CA.
Who deducts on a P2P trade
The obligation sits with the person paying the consideration — the buyer. They pay 99% of the agreed amount to the seller and deposit the remaining 1% with the government against the seller's PAN.
The thresholds
| Who you are | Annual threshold |
|---|---|
| Individual or HUF without a tax audit requirement | ₹50,000 |
| Everyone else | ₹10,000 |
The threshold is per financial year. Below it, no TDS is required; once cumulative consideration crosses it, TDS applies.
Form 26QE
A buyer without a TAN uses the challan-cum-statement Form 26QE, due within 30 days from the end of the month in which the deduction was made. The seller can then see the credit reflected against their PAN. Step-by-step in how to file Form 26QE.
What goes wrong
- Nobody deducts. Common on informal trades; it does not remove the obligation.
- Deducted but never deposited. The seller sees 99% and no credit — the worst outcome for them.
- Wrong PAN. The credit lands nowhere and cannot be claimed.
- Late filing. Interest and fees accrue from the due date.
Clean order records make TDS and year-end filing a bookkeeping job instead of an archaeology project.
Trade on FastXP2PFrequently asked questions
Who pays the 1% TDS in a P2P crypto trade?
The buyer deducts it from the payment and deposits it against the seller's PAN. The seller receives 99% and claims the 1% as credit when filing.
Is TDS applicable below ₹50,000?
For an individual or HUF without an audit requirement, no TDS applies until cumulative consideration in the financial year crosses ₹50,000. For others the limit is ₹10,000.
Is the 1% TDS an extra tax?
No. It is a prepayment credited against your final liability, and refundable if it exceeds the tax you owe.
- TDS
- 194S
- Form 26QE