If you sold crypto on an Indian exchange, the tax department already knows roughly how much. Every sale carries 1% TDS, the exchange files that TDS in its quarterly return, and it shows up against your PAN in the Annual Information Statement (AIS) and Form 26AS. When your ITR has no matching entry in Schedule VDA, the system sees a gap.
That gap is exactly what the government has been chasing. In a written reply to Parliament, the Finance Ministry said CBDT sent 44,057 emails and messages under its NUDGE campaign to people who “invested and traded in the VDAs but did not report the transactions in Schedule VDA”, after matching the TDS returns filed by exchanges against ITRs (Rajya Sabha reply, via CAclubindia; The Hindu BusinessLine).
Read your AIS backwards: TDS × 100 = what you sold
Crypto TDS is 1% of the sale consideration. So the TDS figure in your AIS works as a reverse calculator for your total sales:
| TDS in your AIS | Sales the department can infer |
|---|---|
| ₹500 | ₹50,000 |
| ₹2,000 | ₹2,00,000 |
| ₹10,000 | ₹10,00,000 |
| ₹50,000 | ₹50,00,000 |
The department doesn’t need your profit to spot a problem. It sees sales with no Schedule VDA rows, or Schedule VDA totals that don’t come close to the TDS-implied figure. Our crypto TDS reconciliation tool does this match for you: enter the TDS from your AIS and your reported sales, and it shows the gap.
The four mismatches that trigger questions
As Business Standard reported, quoting Deloitte India’s Sumeet Hemkar, mismatches arise when TDS appears in AIS or Form 26AS but the related income isn’t in Schedule VDA, or when a taxpayer claims more TDS credit than the system shows. BDO India’s Rony Antony told the paper alerts are “typically triggered when discrepancies exceed about Rs 1 lakh”. In practice that covers:
- Sales left out entirely, often by people who never withdrew to the bank. India taxes the sale, not the withdrawal (our explainer).
- Swaps not reported. Each crypto-to-crypto swap is a transfer with its own TDS, so swaps inflate the AIS figure.
- TDS claimed but not in 26AS, for example on a P2P trade where the buyer never deposited the tax.
- Wrong form. ITR-1 has no Schedule VDA, so crypto filed there can’t match (which ITR form to use).
A worked example: what silence costs
Take a salaried investor who sold ₹2,00,000 of crypto in FY 2025-26 that cost ₹1,60,000. The AIS shows ₹2,000 of TDS.
| Route | Tax owed after ₹2,000 TDS credit | Extra cost on top |
|---|---|---|
| Revised return by 31 Dec 2026 | ₹10,480 | Interest only |
| Updated return (ITR-U) within 12 months of AY end | ₹10,480 | 25% = ₹2,620 |
| ITR-U within 24 months | ₹10,480 | 50% = ₹5,240 |
| ITR-U within 48 months | ₹10,480 | 70% = ₹7,336 |
| Found in assessment as under-reporting | ₹10,480 | Penalty of 50% of the ₹12,480 tax = ₹6,240 (200% if misreporting) |
Tax is 30% of the ₹40,000 gain (₹12,000) plus 4% cess (₹480), minus the ₹2,000 already deducted. The ITR-U extras are shown on tax alone, before interest, so real figures run slightly higher. The full deadline ladder is in our revise-or-ITR-U guide.
BtcMedia verdict: for a missed crypto sale, the cheapest moment is always now. A revised return costs nothing beyond tax and interest; every year of waiting adds a fixed surcharge.
If the AIS entry is wrong
Not every mismatch is yours. If the AIS shows TDS from an exchange you never used, or the amount is off, the AIS lets you submit feedback on each entry (for example, that the information is incorrect or belongs to another PAN). Keep the exchange’s annual statement and TDS certificate as proof.
What changes from 2027
Under the new Income-tax Act’s section 509 (the old section 285BAA), Indian crypto platforms must file a separate yearly report of each user’s transactions in Form 167, starting with calendar year 2026 and due by 31 May 2027 (Outlook Business). That report goes beyond the 1% TDS figure, so the department will hold a fuller record of buys, sells and transfers that your Schedule VDA will need to match.
What it means for Indian investors
Before filing, download your AIS, multiply the crypto TDS by 100, and compare it with your sales. Build Schedule VDA rows with our Schedule VDA CSV builder and check the tax in the crypto tax calculator. If TDS was over-deducted, it comes back as a refund (how crypto TDS refunds work).
FAQ
Will I get a notice if I made a loss on crypto? You can. The AIS shows sales, not profit, so unreported sales still look like a gap. Each transfer still needs a Schedule VDA row, with losses entered as nil.
Is the NUDGE email a tax notice? No. Officials describe it as a prompt to review and revise or update the return. Acting on it early keeps the cost to tax, interest and any ITR-U surcharge.
Does crypto on a foreign exchange show in my AIS? Usually not, because foreign platforms rarely deduct Indian TDS. The income is still taxable and must be reported.
How we calculated this: TDS at 1% of sale value; tax at 30% plus 4% cess on a ₹40,000 gain; ITR-U additional tax at 25/50/70% of tax due, excluding interest; penalty at 50% of tax on under-reported income under section 270A of the 1961 Act, which governs AY 2026-27. Calculated 1 Nov 2026, IST.
This is general information, not financial or tax advice. Check your own case with a qualified chartered accountant.