Indian Compliance & Tax

How does the 1% TDS on VDA transfers actually work?

The 1 percent TDS on VDA transfers works by withholding 1 percent of the transfer value at the time a Virtual Digital Asset is sold or exchanged, under Section 194S, once it crosses the prescribed threshold. The deductor, often the exchange facilitating the transaction, holds back the amount, deposits it with the government, and reports it against the seller's PAN. For instance, selling fifty thousand rupees of a token triggers five hundred rupees withheld. This sum is not a separate cost; it is credited against the seller's final tax and reconciled when the annual return is filed.

This is general information, not tax advice. Tax rules change and depend on your individual circumstances — verify the current rules or consult a qualified tax professional before acting.