The short answer: yes, crypto TDS in India is refundable. The 1% that your exchange cuts under Section 194S is not a second tax on top of the 30% rate. It is an advance payment against your final tax bill, and anything above that bill comes back to you, but only after you file an income tax return that reports the trades correctly.
Plenty of traders never claim it. Exchange finance heads told CNBC-TV18 that many investors wrongly treat the 1% as an extra charge. That mistake is expensive for anyone who sold at a loss, because TDS is charged on the sale value, not on profit.
Why loss-making traders pay TDS anyway
The exchange cannot see what you paid for the coin, so it deducts 1% of every qualifying sale. For individuals without business income, TDS starts once yearly sales cross ₹50,000 (₹10,000 for others). Sell ₹15 lakh of crypto in a year and ₹15,000 is deducted, whether you made ₹3 lakh or lost ₹3 lakh.
Crypto losses also cannot be set off against other income or carried forward, as our loss set-off explainer shows. So the TDS refund is often the only rupee a losing trader gets back from the taxman.
Two worked examples
Both assume salary tax is fully covered by the employer’s TDS, so only crypto changes the result. Tax on crypto gains is 30% plus 4% cess, or 31.2%.
| Small profit | Net loss | |
|---|---|---|
| Crypto sold in the year | ₹15,00,000 | ₹15,00,000 |
| TDS deducted at 1% | ₹15,000 | ₹15,000 |
| Taxable crypto gain | ₹40,000 | ₹0 (loss ignored) |
| Tax on crypto at 31.2% | ₹12,480 | ₹0 |
| Refund due | ₹2,520 | ₹15,000 |
BtcMedia calculation. Losses on one coin cannot reduce gains on another, so “taxable gain” is the sum of profitable sales only.
Run your own numbers in the crypto TDS calculator, which shows whether you are owed a refund or still owe tax.
How to claim it in the ITR
- Download Form 26AS and the AIS from the e-filing portal and total the 194S entries from each exchange. Our TDS reconciliation tool helps match them.
- Pick the right form. ITR-2 if crypto is a capital gain, ITR-3 if you treat trading as business income, per experts quoted by AnpTaxCorp.
- Report every sale in Schedule VDA. The sale values should match the amounts TDS was deducted on.
- Claim the TDS in the TDS schedule exactly as Form 26AS shows it. Mismatches delay or deny the credit.
- Pre-validate your bank account on the portal. Refunds go only to validated accounts.
The crypto ITR checklist walks through each step.
Does the refund earn interest?
Sometimes. Section 244A pays 0.5% a month (6% a year, simple) on refunds, as listed by the Income Tax Department. Experts quoted by Mint add the conditions: the refund must exceed 10% of the tax determined, interest runs from 1 April of the assessment year only if you filed by the due date, and a part month counts as a full month.
Take the loss example. If the ₹15,000 is refunded on 15 December after an on-time July filing, that is nine counted months, so ₹15,000 × 0.5% × 9 = ₹675 of interest. In the profit example, ₹2,520 is unlikely to clear the 10% test once salary tax is counted, so it would probably earn nothing.
BtcMedia verdict
The 1% is your money on loan to the government. The cost is time: TDS cut in April can sit with the department for well over a year, and interest only starts from the next 1 April. Active traders feel this most, because TDS scales with turnover, not profit. File on time, match Form 26AS line by line, and the money comes back.
What it means for Indian investors
- Every ₹1 lakh of crypto sold locks up ₹1,000 until refund, whatever your profit.
- A late return loses the interest that would otherwise run from 1 April.
- The Income-tax Act, 2025 took effect on 1 April 2026 with new section numbers; returns for earlier years follow the 1961 Act sections used here.
FAQ
Is crypto TDS refundable if I made a loss? Yes. If your final tax on crypto and other income is lower than the TDS deducted, the excess is refunded after you file your ITR.
Which ITR form do I use to claim crypto TDS? Usually ITR-2 for capital gains, or ITR-3 if crypto trading is business income.
Do I get interest on a crypto TDS refund? At 0.5% a month, only if the refund exceeds 10% of the tax determined and the return was filed on time.
How we calculated this: 1% TDS on assumed ₹15 lakh annual sales, 31.2% tax on gains, Section 244A rules as reported by Mint; calculated 29 October 2026, 12:55 AM IST. This is not financial or tax advice; check your own case with a chartered accountant.