CBDT Circular 13 of 2022 on crypto TDS, explained question by question

What the circular is

Section 194S of the Income-tax Act, 1961 brought in a 1% TDS on payments for crypto and other virtual digital assets (VDAs) from 1 July 2022. Its sub-section (6) let the Central Board of Direct Taxes (CBDT) issue guidelines to remove difficulties. Circular No. 13 of 2022 (F.No. 370142/29/2022-TPL (Part-I), dated 22 June 2022) is those guidelines: six pages, six questions.

One thing most summaries miss: the circular is written almost entirely for exchanges. The word "Exchange" appears 42 times; "peer to peer" appears once, to say that for P2P deals only the answer to Question 6 applies. If you trade on WazirX, CoinDCX, CoinSwitch or a similar Indian platform, this circular decides how your TDS is cut.

Is it still valid under the Income-tax Act, 2025?

Yes. The 2025 Act replaced the 1961 Act from 1 April 2026, but section 536(2)(j) says any circular issued under the old Act, "so far as it is not inconsistent with the corresponding provisions of this Act", is deemed to have been issued under the corresponding new provision and "shall continue in force accordingly" (Gazette text, page 492). The new home of the CBDT's power to issue these guidelines is section 400(2); the 1% TDS itself is now section 393(1), Table Sl. No. 8(vi). See our old-to-new section map for the full list.

The only things that changed in practice are form names: Form 26QF (exchange statements) and 26QE (challan-cum-statement for specified persons) now have new numbers under the 2025 rules, such as Form 142 for exchange statements.

Question 1: who deducts when you trade on an exchange

You sell, the exchange pays you. The exchange is the one crediting or paying you, so the exchange deducts 1%. If a broker owns the coins being sold, the broker counts as the seller.

You trade through a broker on an exchange. By default both the exchange and the broker are responsible. If they sign a written agreement, the broker alone deducts, and the exchange files a quarterly statement of all such trades by the due date.

You buy coins the exchange itself owns. Now the exchange is the seller, so the law puts the duty on the buyer or the buyer's broker. Because a buyer has no way to know whose coins they are getting, the circular allows a practical fix: the exchange can agree in writing to pay this tax itself, file the quarterly statement and its own return. The buyer is then not treated as "assessee in default" under section 201.

The circular also defines the words: an Exchange is any person running an application or platform that matches buyers and sellers of VDAs, and a Broker is a person who places orders on the exchange for clients.

Question 2: paid in kind and crypto-to-crypto swaps

Where the payment is in kind (another coin, goods, anything but money), there is no cash to cut 1% from. The payer must make sure the tax has been paid before handing over the payment. In practice the seller pays it as advance tax and shows the challan; the payer then reports it.

In a swap, both sides are buyers and sellers, so both are liable. On an exchange the circular lets the exchange handle it under a written agreement, step by step:

• 1% of each coin is withheld. The circular's example is a Monero-for-Deso trade: 1% of the Monero and 1% of the Deso are held back.
• Withheld coins that are not "primary" are converted at once into a primary VDA by market order. The circular lists the primary VDAs literally as "(BT, ETH, USDT, USDC)", meaning Bitcoin, Ether, Tether and USD Coin.
• Everything withheld from 00:00 to 23:59 is pooled and sold for rupees at 00:00 hours against open buy orders, and the rupees go to the government. The exchange cannot be the buyer of these coins.
• You get a contract note by email, and no further TDS is charged on that conversion.

Question 3: no double TDS with section 194Q

Section 194Q is the 0.1% TDS on purchases of goods by large buyers. If tax has been deducted under 194S on a crypto trade, 194Q does not apply to the same transaction.

Question 4: 1% of what amount

TDS is on the consideration excluding GST and charges levied by the deductor (for example the exchange fee and the GST on it). So on a ₹1,00,000 sale with ₹236 of fee plus GST, TDS is 1% of ₹99,764, which is ₹997.64, not ₹1,000. Try it in the picker above or the full crypto TDS calculator.

Question 5: payment gateways

If the buyer has already deducted TDS, a payment gateway that processes the same payment does not have to deduct again. The gateway may take an undertaking from the buyer that the tax was deducted.

Question 6: the threshold year started on 1 April 2022

The ₹50,000 limit (for "specified persons", an individual or HUF with no business income, or with turnover up to ₹1 crore or professional receipts up to ₹50 lakh) and the ₹10,000 limit (everyone else, including exchanges) are yearly. Question 6 says the count for 2022-23 started from 1 April 2022, but sums paid or credited before 1 July 2022 were not taxed. This is the one answer the circular says also applies to P2P deals.

What the circular does not cover: P2P

For a peer-to-peer or OTC deal, the exchange rules above do not apply. The plain law applies: whoever pays you deducts 1%. If the buyer is a specified person, they need no TAN; they quote their PAN and deposit the tax with a challan-cum-statement within 30 days from the end of the month (Income Tax Department). If you have no PAN, the rate is 20%; if the seller is a non-resident, section 195 (now 393(2)) applies instead.

What to check as a trader

Match the TDS in your exchange's TDS report with Form 26AS or AIS (Form 168 under the new rules). The 1% is not an extra tax: it is credit against your final bill under the 30% regime. For how to report it, see our Schedule VDA guide, and for the thresholds and how much cash TDS locks up for active traders, our 1% TDS guide.

This guide is general information, not tax advice. Every point above is taken from the text of Circular 13/2022 and the Income Tax Department's TDS page; for your own case, consult a chartered accountant.