Since July 2022 every sale of a virtual digital asset in India carries a 1% tax deducted at source. For tax year 2026-27 the rule sits in section 393(1) of the Income-tax Act 2025 (it was section 194S before). The exchange deducts it, deposits it with the government, and it appears in your Form 26AS and AIS as a credit against your PAN. Simple on paper. In practice it is the most common source of mismatches in a crypto return.
Why your figures and 26AS disagree
- Quarter shift. The exchange reports TDS by the quarter it filed the statement, not always the quarter of the trade. A sale on 30 June can show up in the July to September block.
- Base amount is gross sale value. TDS is 1% of the consideration, before fees. If you compare it with your net proceeds, you will be short.
- Swaps on Indian exchanges. A coin-to-coin trade is a sale, and the exchange deducts 1% of the rupee value of the coin you gave. Many traders do not count swaps as sales, so the TDS looks too high.
- Foreign exchanges deduct nothing. Binance, Bybit, Bitget and the rest do not deduct Indian TDS. Technically the buyer, that is you on your own purchases, is meant to deduct and deposit. Almost nobody does. The practical effect is that your 26AS covers only the Indian side, and the foreign rows in Schedule VDA have no TDS behind them. That is normal and is not an error in your return; it only means more tax to pay at filing.
- P2P and offline deals. Same as foreign exchanges: no TDS credit unless the counterparty deducted and filed in your PAN.
A reconciliation that holds up
- Download Form 26AS and the TDS section of AIS for the year. Sort the crypto lines by deductor and quarter.
- From each Indian exchange, take the TDS statement or the trade history with the TDS column. Sum by quarter.
- Match deductor by deductor. The exchange total for the year should equal the 26AS total for that deductor. If a quarter differs but the year matches, it is the quarter shift and nothing is wrong.
- If the year differs, look for: trades in the first days of April counted in the wrong year, a second account on the same exchange, or a correction statement the exchange filed later.
- Claim in the return exactly what 26AS shows, and no more. A claim above 26AS is refused automatically in the intimation under section 270 (old 143(1)).
What the credit is worth
The 1% is a prepayment, not an extra tax. If your gains are small, it comes back as a refund. If you traded a lot with thin margins, you may have paid more in TDS than the 30% on your net gains, and the refund can be substantial. That refund only arrives if the Schedule VDA rows and the TDS schedule agree with each other.
Keep this for six years
The exchange TDS certificates (Form 16A), the quarterly exports and your reconciliation sheet. A notice can come well after the year closes, and the reconciliation is the first thing the officer will ask for.
The Crypto Tax Pack does this reconciliation from your exports and your 26AS and lists every line that does not tie. Six months free to try.
General information for Indian traders; not tax advice. Your CA files the return.