TDS on Crypto: What It Is, How It Applies, and Where It Matters

When you trade or earn crypto, TDS on crypto, a tax deduction at source applied to crypto transactions by exchanges or platforms. Also known as crypto tax withholding, it’s not optional—it’s enforced by governments to track digital asset income before it leaves your account. In places like India, TDS kicks in at 1% on every crypto trade over a certain threshold. That means if you buy $10,000 worth of Bitcoin, $100 gets pulled out automatically and sent to the tax authority. No invoice. No form. Just gone. And it applies whether you’re swapping tokens, cashing out, or even receiving crypto as payment.

This isn’t just about exchanges. TDS on crypto also affects staking rewards, mining payouts, and even airdrops if they’re processed through a regulated platform. The tax isn’t on your profit—it’s on the total value of the transaction. That’s why someone who buys ETH for $2,000 and sells it for $3,000 still pays TDS on the full $3,000 sale, even if they only made $1,000 in gains. It’s a blunt tool, designed for simplicity, not fairness. And it’s spreading. Countries like the UK and Australia are testing similar systems, while others like the UAE and Portugal still don’t apply it—but if you’re an Indian resident or trading on Indian platforms, TDS is already part of your crypto reality.

What makes TDS on crypto tricky is that it doesn’t replace your annual tax bill—it stacks on top of it. You still need to report your gains and losses when you file. The TDS you paid might reduce what you owe, or it might not cover it at all. If you’re trading heavily, you could end up paying TDS multiple times a week and then get stuck with a big tax bill at year-end. And if you’re using non-custodial wallets? You’re exempt from TDS at the point of trade, but you lose all paper trail—making it harder to prove your costs to tax authorities later. The system favors centralized platforms, not self-custody.

Below, you’ll find real-world breakdowns of how TDS impacts crypto users in India, what happens when exchanges fail to withhold correctly, and how other countries are adapting—or avoiding—this model. You’ll also see how TDS intersects with other rules: crypto advertising bans, wallet regulations, and even offshore tax strategies. This isn’t theory. It’s happening right now, in your trades, your earnings, and your wallet.