TDS u/s 194S on Crypto: Reconcile Exchange 194S with Form 26AS Before Filing

1% TDS applies under s.194S of the Income-tax Act, 1961 to every VDA transfer by a resident, deducted by the exchange (or the buyer on P2P) — and the single most common reason a crypto filer gets a s.143(1) demand is that the TDS they claimed does not match what 26AS and AIS actually show. The rate is 1%, the threshold is ₹50,000 per financial year for specified persons and ₹10,000 for everyone else, and the reconciliation rule is simple: claim only what appears in your 26AS/AIS, and before you file, close the gap between what the exchange says it deducted and what the department says it received.

The s.194S charge at a glance

The deduction is made before crediting the sale consideration. On Indian exchanges the exchange is the deductor — it withholds 1% on your sale proceeds and deposits it to the Government account, and the credit flows to your Form 26AS and AIS. On a P2P transfer with no exchange, the buyer is the deductor, and a P2P seller who received full consideration with no TDS is exposed if the buyer defaulted (CBDT Circular 13/2022 governs the mechanics).

Note on forms: the exchange's 1% TDS is reported through its TDS statement (Form 26Q) and the credit appears in your Form 26AS; a TDS certificate (Form 16A) is issued on request. — confirm the current certificate and statement forms for your assessment year.

Where the TDS appears

• Form 26AS — TDS section: the s.194S deduction by the exchange appears here once the exchange files its TDS statement and the credit is posted.
• AIS — TDS/TCS and SFT sections: AIS mirrors the TDS credit and separately reports the gross VDA transactions under the SFT (Statement of Financial Transactions) data. These are two different numbers: TDS (a credit) and gross consideration (the department's record of the trade).

A common misread: the AIS "VDA" transaction figure is gross sale consideration, not TDS. Reconcile both — the TDS credit against your liability, and the gross consideration against your Schedule VDA disclosures.

Why exchange TDS and 26AS disagree — the mismatch table

Changed FY 2025-26: No change to the s.194S rate or thresholds — 1% with the ₹50,000/₹10,000 limits has applied since 1 July 2022. What changed is visibility: exchange TDS statements and VDA SFT data now reach a far larger share of filers' AIS, so a claimed credit that does not reconcile with 26AS is caught automatically at s.143(1) processing.

The reconciliation workflow (do this before filing)

• Log in to the income-tax portal → AIS → download the AIS (PDF + JSON) and open Form 26AS.
• Pull the exchange statement — every exchange that deducted TDS, per transaction, with the TDS amount and PAN used.
• Compare line by line — for each sale, match: date, gross consideration, TDS amount, and PAN against 26AS.
• Flag mismatches — note each transaction where the amounts differ or the TDS is missing from 26AS.
• Chase corrections — if the exchange used a wrong PAN or section, ask it to file a correction statement (TDS return correction) so 26AS updates.
• Raise AIS feedback for entries that are genuinely not yours (wrong PAN, unrelated transaction).
• File only what reconciles — claim TDS credit only for amounts appearing in 26AS/AIS; for anything else, document why and keep the paper trail.

Do not claim credit for TDS that appears in neither 26AS nor AIS. A claimed credit that the department cannot verify is precisely what triggers a 143(1) adjustment with interest.

Worked example: Ananya's ETH sale — the ₹500 gap

Persona: Ananya, salaried, sells Ethereum on a large Indian exchange, FY 2025-26.

Facts:

• Sells ETH for ₹8,00,000 on 20 March 2026.


• Exchange deducts 1% TDS = ₹8,000, shows it on her dashboard.


• She files her ITR on 15 July 2026 claiming ₹8,000 credit.

The problem: the exchange's TDS statement for the March quarter is filed in April–May, but the credit posts to her 26AS after she files. Her 26AS shows ₹7,500 (an earlier trade's TDS), not ₹8,000. The department's system compares her claimed ₹8,000 against 26AS ₹7,500.

Step 1 — Before filing: download 26AS (portal shows "as per 26AS" for the TDS credit). If ₹8,000 is not there, either wait for the posting or claim ₹7,500 and reconcile ₹500 separately.

Step 2 — After the posting: if the ₹8,000 appears after filing and she claimed less, she can revise (s.139(5)) if within the due date, or file a rectification (s.154) to claim the balance credit.

Step 3 — Documentation: keep the exchange TDS certificate, the trade confirmation, and the 26AS screenshot. If the department later flags the ₹500, the paper trail closes it.

The ₹500 looks trivial — but a 143(1) intimation built on a TDS mismatch scales with every under-reconciled trade. Reconcile at transaction level before you file.

Frequently asked questions

1. What is the TDS rate on crypto under s.194S?

2. What is the TDS threshold for crypto?

3. Where does my crypto TDS show up?

4. Exchange says TDS ₹8,000 but 26AS shows ₹7,500 — what do I claim?

5. What if the exchange deducted TDS but it never appears on 26AS?

6. Can I claim TDS on a P2P sale?

7. What happens if I claim TDS that doesn't reconcile?

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Last verified: 2026-08-08 (FY 2025-26 / AY 2026-27)

Sources: s.194S, Income-tax Act, 1961 (1% TDS on VDA transfers; thresholds per specified-person status); CBDT Circular 13/2022 (22-06-2022, s.194S operational mechanics); s.199 (credit for TDS); s.203AA (Form 26AS); s.285BA read with Rule 114-I (AIS); s.139(5) (revised return); s.154 (rectification); s.143(1) (processing adjustment). Certificate/statement form references flagged for CA verification. For TDS reconciliation, use the AIS Reconciliation Tool.

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