India’s New Crypto TDS Rule 2.0: What Changes on 1 Oct 2025 & How It Affects Every Trader
Vishal Kumar Sharma • July 22nd, 2025 • 5 min read • 👁️ 30 views • 💬 0 comments

🌏 India’s New Crypto TDS Rule 2.0: What Changes on 1 Oct 2025 and How It Affects Every Trader
Nothing is certain except death, taxes… and crypto regulations that change faster than a bull-run candle.
— Indian Crypto Twitter, 2025 edition
1. The Headline in 25 Seconds
From 1 October 2025, the dreaded 1 % TDS on crypto sales is being slashed to 0.1 % for most trades, refunds become possible, and every exchange must plug into a government API. If you buy or sell ₹10 000+ of crypto in a year (₹50 000 for businesses), the new rule will touch you.
2. Flashback: Why the Old 1 % Rule Was Hated
Pain Point | What Happened |
---|---|
Liquidity killer | Traders avoided Indian exchanges, volumes fled offshore . |
No set-off | Loss on SOL couldn’t cancel profit on BTC, tax still due on the gain . |
No refund | Over-deducted TDS? You could only adjust it against other tax dues, never get cash back. |
Complicated | P2P buyers had to deduct and deposit TDS themselves, most didn’t . |
The result: ₹1 200 cr TDS collected vs ₹8 000 cr target .
Clearly, something had to give.
3. TDS 2.0 - The Draft Amendment at a Glance
(Finance Ministry released draft 18 July 2025; public comment open till 30 Sept)
Parameter | Old Rule (till 30 Sept 2025) | New Rule (from 1 Oct 2025) |
---|---|---|
Rate | 1 % of sale value | 0.1 % of sale value |
Threshold (individuals) | ₹50 000 / yr | ₹10 000 / yr |
Threshold (businesses) | ₹50 000 / yr | ₹50 000 / yr (unchanged) |
Refund Mechanism | ❌ Only adjustment | ✅ Cash refund if excess TDS |
Exchange Reporting | Manual quarterly | Real-time API (Kāveri chain) |
Set-off / Carry-forward | ❌ Not allowed | Still NOT allowed (status quo) |
4. Real-World Impact: Three Traders, Three Scenarios
Trader A – College Student
- Buys ₹8 000 ETH in Oct 2025 → No TDS (below ₹10 k).
- Old rule: would have paid ₹80 TDS.
- Savings: ₹80 stays in wallet 🎉.
Trader B – Side-Hustler
- Sells ₹2 lakh BTC in Nov 2025.
- TDS: 0.1 % × ₹2 L = ₹200 (vs old ₹2 000).
- Liquidity unlocked: ₹1 800 extra margin.
Trader C – Prop Desk
- Monthly volume ₹40 lakh.
- TDS per month drops from ₹40 000 → ₹4 000.
- Annual working-capital freed: ₹4.32 lakh 💸.
5. The Refund Revolution, How It Works
For the first time, you can get actual cash back:
- Excess TDS (e.g., you’re in 0 % slab) appears in Form 26AS via API.
- File ITR with Schedule VDA + Schedule TDS .
- Refund credited like any other excess TDS, within 45 days if e-verified.
“This single tweak converts TDS from a liquidity choke-hold into a manageable prepayment.”
— CA Sonu Jain, 9Point Capital
6. Exchange & P2P Checklist Before 1 Oct
Stakeholder | Action Required |
---|---|
Centralised Exchanges | Integrate Kāveri API, Auto-adjust new threshold & rate, Show live TDS break-up on order screen |
P2P Platforms | Push new TDS rate in smart contract escrow, Add 0.1 % TDS line-item in invoices |
Traders | Update KYC PAN seeding (for refund routing), Download trade P&L before 30 Sept for old-rate reconciliation |
7. Step-by-Step Refund Walk-Through
1. Log in to your exchange API dashboard → Export FY 2025-26 trades CSV
2. Import into KoinX / Cleartax Crypto (or any SFT-compliant tool)
3. Tag transactions with new 0.1 % TDS
4. File ITR-2/3 before 31 July 2026
5. Claim excess TDS in “Schedule TDS” → Refund hits bank in ~45 days
8. Frequently Asked Questions (FAQ)
Q1: I trade on Binance; does the new rate apply?
A: Yes, if the counter-party is an Indian resident or the platform serves Indian users. TDS is location-based, not exchange-based.
Q2: Can I finally offset BTC losses against ETH gains?
A: No. Section 115BBH still prohibits set-off . The amendment only tweaks TDS, not the 30 % tax or loss rules.
Q3: What if I forget to claim the refund?
A: You have until 31 March 2027 to file a belated return under Sec 139(4) . After that, the money lapses to government.
9. Bottom Line, Should You Cheer or Fear?
Cheer | Fear |
---|---|
90 % cheaper TDS → better liquidity | Still 30 % flat tax + 4 % cess |
Cash refund for low/no-tax traders | Real-time API = more scrutiny |
Smaller traders below ₹10 k exempt | Loss set-off still banned |
Net verdict: The rule is friendlier, but compliance is tighter. Treat it as a nudge to trade smarter, not harder.
📌 Ready-to-Use Resources
- Download PDF Cheat-Sheet: https://www.multigyan.in/tds-2-0-cheat-sheet (Coming Soon)
- Google-Sheet Calculator: Make a copy → plug your FY 25-26 trades (Coming Soon)
- Set calendar reminder: 1 Oct 2025 – new rate kicks in!
Disclaimer: This article is for educational purposes only and does not constitute financial or tax advice. Consult your CA for personal situations.