WazirX has revised its guidance on crypto tax deductions for the 2025-26 financial year, highlighting the new 1% TDS requirement on eligible digital asset transfers under Section 194S, impacting traders and investors in India.
WazirX has updated its guidance on crypto tax deduction in India to reflect the current rules for the 2025-26 financial year, with Section 194S requiring 1% tax deducted at source on eligible transfers of virtual digital assets, including cryptocurrencies and NFTs. The exchange says the levy applies to the transaction value rather than profit, which means tax can still be deducted even when a trade ends in a loss.
Under the present framework, the annual threshold is ₹50,000 for specified individuals and Hindu undivided families, and ₹10,000 for other taxpayers, according to WazirX and tax guidance published by specialist advisers. If a PAN is missing or not linked, a higher deduction can apply under Section 206AA. Taxclue and other explainers on Section 194S note that the rule, introduced in 2022, was designed to capture transfers of virtual digital assets rather than just realised gains.
WazirX says it handles the deduction automatically for eligible trades executed on its platform, including crypto-to-rupee and crypto-to-crypto transactions. In the latter case, the exchange says the tax may be withheld in the digital asset being traded, then converted into rupees and remitted to the tax authorities. The company also says users can check deductions through completed order history, trading reports and Form 26AS.
The exchange’s support material says the tax is not charged on every movement of coins. Transfers between a user’s own wallets are not treated as taxable transfers under Section 194S, provided no consideration is received in return. That distinction is important for retail traders, who often confuse withdrawals and internal transfers with taxable disposals.
WazirX also stresses that TDS is only an advance collection mechanism. Final tax on crypto gains is still governed separately by Section 115BBH, which taxes eligible gains at 30%, plus applicable cess, with only the cost of acquisition allowed as a deduction. Any TDS already collected is credited against the final liability when the income tax return is filed, and excess amounts can be claimed as a refund. The exchange says gains should be reported in Schedule VDA, using ITR-2 for capital gains or ITR-3 for business income.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
