Crypto TDS Refund: How to Claim Your 1% TDS Back in India
The 1% TDS on crypto sales is not a final tax. Learn when you are eligible for a crypto TDS refund, how to claim it in your ITR and how to fix common delays.
You can get a crypto TDS refund only by filing an income tax return: the 1% TDS deducted on your crypto sales is credited against your total tax bill, and if the TDS (plus any other taxes paid) is more than the tax you actually owe, the excess is refunded to your bank account after the return is processed. There is no separate refund application for 1% TDS; the ITR itself is the claim.
Key takeaways
- 1% TDS is deducted on the sale value of crypto, not on profit, so traders who sold at a loss or small gain often have excess TDS.
- The refund is claimed through ITR-2 or ITR-3 by reporting trades in Schedule VDA and claiming the TDS shown in AIS/Form 26AS.
- TDS is set off against your whole tax liability for the year, including tax on salary, before any refund is paid.
- Your bank account must be pre-validated on the e-filing portal, and the return must be e-verified, or the refund will stall.
- Under the Income-tax Act, 2025 the TDS provision is now section 393(1) (formerly 194S); the refund route through the ITR is unchanged.
Why crypto traders end up with excess TDS
Indian exchanges deduct 1% TDS on the consideration (the gross sale value) once your sales cross the yearly threshold (₹10,000 for most individuals, ₹50,000 for specified persons). The tax on crypto, however, is 30% of the gain. When gains are small or negative, the TDS can exceed the tax due. See what is 1% TDS on crypto for the basics.
Illustrative example (hypothetical numbers): you buy a coin for ₹5,20,000 and later sell it for ₹5,00,000. The exchange deducts ₹5,000 as TDS. Your VDA income on this trade is nil (the loss cannot be set off elsewhere), so no VDA tax is due on it. If your other income’s tax is fully covered by salary TDS, the ₹5,000 can come back as a refund.
| Scenario | TDS deducted | VDA tax due | Likely outcome |
|---|---|---|---|
| Sold at a loss | 1% of sale value | Nil on that trade | Excess TDS usually refundable |
| Small gain relative to sale value | 1% of sale value | 30% of gain + cess | Partial refund if TDS exceeds tax |
| Large gain | 1% of sale value | 30% of gain + cess | Balance tax payable, no refund |
Remember that each coin is treated separately (see crypto loss set-off rules). Losses on one coin cannot reduce gains on another, so a trader with mixed results may still owe tax. Run your numbers through our crypto tax calculator first.
How to claim a crypto TDS refund: step by step
- Check AIS and Form 26AS. Log in to the e-filing portal and confirm that every exchange’s TDS appears under the VDA TDS section (194S for FY 2025-26; section 393(1) for tax year 2026-27 onwards). Form 26AS is renumbered Form 168 under the Income-tax Rules, 2026.
- Collect your exchange reports. Download the annual tax/P&L report and TDS certificates from each exchange.
- Pick the correct ITR. Use ITR-2 for crypto held as an investment or ITR-3 if you treat it as business income.
- Report every transfer in Schedule VDA, including loss-making trades. Fill in every field for each row: dates, head of income, cost of acquisition and sale value (consideration).
- Claim the TDS in the TDS schedule for income other than salary, entering the deductor’s TAN and the amount exactly as it appears in AIS/26AS.
- Pre-validate your bank account on the portal (profile → my bank account). The account must be in your name and linked to your PAN.
- File and e-verify within 30 days of filing. An unverified return is treated as not filed.
- Track the refund under “Refund/Demand status” on the e-filing portal after you receive the processing intimation.
When will the refund arrive?
There is no fixed timeline you can rely on. Refunds are issued after the Centralised Processing Centre processes the return, which can take anywhere from a few weeks to several months depending on the case. The law provides for interest on delayed refunds in many situations. Filing early, e-verifying immediately and ensuring your TDS entries match exactly tend to reduce delays.
Common reasons crypto TDS refunds get stuck
- TDS not reflected: the exchange filed its quarterly TDS return late or with errors. Ask the exchange to correct it; you cannot claim credit that is not in your AIS/26AS.
- Wrong year: TDS deducted in March but claimed in the next year’s return, or vice versa.
- Income not reported: claiming TDS without showing the matching sales in Schedule VDA can trigger an adjustment or notice.
- Bank account issues: account not pre-validated, closed, or PAN-name mismatch. Use the “refund reissue” service on the portal once fixed.
- Outstanding demand: the department may adjust your refund against an earlier tax demand after giving you notice.
P2P and foreign platforms
On P2P trades, the buyer is legally responsible for deducting TDS, and in practice this often does not happen. If no TDS was deducted, there is nothing to refund, but you still owe tax on the gain. On offshore platforms that do not deduct Indian TDS, the same applies. For platform choice, see how to choose a crypto exchange in India.
Missed the deadline?
For FY 2025-26, a belated return can generally be filed up to 31 December 2026, and you can still claim your TDS refund in it (a late fee may apply). Our guide on how to file crypto taxes in India covers the full filing process. An updated return (ITR-U) cannot be used to claim or increase a refund, so do not wait too long. A CA can help you check whether a condonation request is possible for older years.
Frequently asked questions
Is the 1% TDS on crypto refundable?
Yes, to the extent it exceeds your total tax liability for the year. You claim it by filing your ITR; there is no separate refund form.
Can I get a crypto TDS refund if I made a loss?
Often yes. A loss on a VDA means no tax on that trade, so the TDS deducted on the sale value can be refunded if your other income’s tax is already covered.
Can the crypto loss reduce tax on my salary?
No. VDA losses cannot be set off against salary or any other income, nor carried forward. Only the TDS credit can reduce your overall tax bill.
How do I check crypto TDS deducted by my exchange?
Log in to the e-filing portal and view AIS or Form 26AS. TDS on VDA transfers appears with the exchange’s TAN. Many exchanges also show TDS in their tax reports.
Can I claim a crypto TDS refund in ITR-U?
No. An updated return cannot be filed to claim or increase a refund. Use your original or belated return to claim it.
Consult a CA: if you traded on several platforms, used P2P, or have TDS mismatches, a chartered accountant can reconcile your figures before you file.
This guide is educational and general in nature. It is not investment, tax or legal advice, and nothing here is a guarantee of any return. Crypto is volatile and you can lose money; only invest what you can afford to lose.
This article is AI-assisted, educational and general in nature. It is not financial advice and never a guarantee of profit. Every trade is at your own risk on your own exchange. See our risk disclosure and editorial policy.
