What is the TDS on crypto?

TDS, or Tax Deducted at Source for Virtual Digital Assets (VDA), was introduced in a new section of the Finance Bill of 2022, specifically under section 194S of the Income-Tax Act, 1961. This section mandates a 1% TDS on any consideration paid for the transfer of Virtual Digital Assets.

In simpler terms, when you sell a cryptocurrency on Mudrex, you (or the exchange facilitating the transaction) are required to deduct and withhold 1% of the transaction value as TDS, which is then remitted to the Government.

According to Income Tax regulations, if your transactions (both buy and sell) amount to less than ₹10,000, TDS may not be applicable. However, please note that these limits apply at the user level across all exchanges they trade on. Since Mudrex does not have visibility into trades conducted across other platforms, we are required to deduct TDS from all transactions starting July 1, 2022.