Buying crypto P2P? How to deduct the 1% TDS yourself
On peer-to-peer crypto purchases, the buyer must deduct 1% TDS. Who it applies to, getting the seller's PAN, the 20% no-PAN rate, and filing Form 141.
- Checked against the rules: Sept 2026
- Sources cited · No buy or sell calls
- Tax year 2026–27
Everyone knows exchanges deduct 1% TDS when you sell crypto. Fewer people know that when you buy crypto directly from another person, the law puts that duty on you. Here's how it works in practice.
When you must deduct
You must deduct TDS when you pay a resident for a virtual digital asset and the total you pay to that person in the financial year crosses:
- ₹50,000 if you're a "specified person": an individual or HUF with no business or professional income, or with business turnover up to ₹1 crore or professional receipts up to ₹50 lakh,
- ₹10,000 if you're anyone else.
The rate is 1% of the payment. TDS is due when you pay or credit the seller, whichever is earlier.
Getting the seller's PAN
You need the seller's PAN to deduct at 1%. If the seller doesn't give it, TDS is due at 20%. On anonymous P2P marketplaces, sellers often refuse, which leaves the buyer either paying 20% or not complying. This is one of the strongest reasons to buy through an exchange's own INR market instead.
How to deposit and report
If you're a specified person (most individual investors):
- Deduct 1% from the payment and pay the seller the rest.
- Deposit the TDS online on the Income Tax e-filing portal using the challan-cum-statement, Form 141 under the Income-tax Rules, 2026 (formerly Form 26QE), within 30 days from the end of the month of deduction. You use your PAN; no TAN is needed.
- You'll need both parties' PAN, name, address and contact details, the value of the VDA, and the dates of transfer, payment and deduction.
- Download the TDS certificate (formerly Form 16E) and give it to the seller, so the credit appears in their AIS.
If you're not a specified person (for example a business with turnover above the limits), you need a TAN and report through the regular quarterly TDS return.
What if the P2P happens on a platform?
When a P2P deal happens through an exchange or a broker, the law lets the platform or broker take on the deduction, often by written agreement. Check the platform's TDS policy. If it doesn't handle TDS, the duty stays with you as the buyer.
Payments in crypto
If you pay for one VDA with another, the buyer still has to make sure TDS is paid, typically by having the seller pay it and show proof before the transfer is completed.
What happens if you don't deduct
A buyer who fails to deduct or deposit TDS can face interest on the amount, late filing fees and penalties. The seller's tax liability on any gain remains separate.
Related guides
Frequently asked questions
Is the ₹50,000 limit per exchange or per PAN?
The thresholds are about the total paid by a buyer to a seller in the financial year. On Indian exchanges, TDS is deducted on almost every sale regardless.
I bought ₹20,000 of USDT on P2P. Do I need to deduct?
If you're a specified person and your total payments to that seller in the year stay at or below ₹50,000, no TDS is required.
Does this apply to DEX swaps?
In principle, yes, but there's no identifiable seller on a DEX, so it isn't practically possible. Your own tax on any gain still applies. See crypto swaps.
Who deducts TDS on a P2P crypto trade?
The buyer is generally responsible for deducting 1% TDS and depositing it with Form 141 (formerly 26QE), within 30 days.
Do small P2P buyers need a TAN?
No. Buyers deducting under the VDA rules can generally use Form 141 with their PAN, without a TAN.
Sources
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