If you've been selling crypto on Indian exchanges like CoinDCX, WazirX, or CoinSwitch, you've probably noticed 1% TDS being deducted on every sell transaction. That TDS adds up over the year — and here's what many traders don't realize: if the TDS deducted exceeds your actual tax liability, you get the difference back as a refund.
Let me walk you through exactly how this works and how to claim your money back.
When Do You Get a TDS Refund?
The 1% TDS under Section 194S is deducted on the sale consideration — meaning the total sell amount, not your profit. So even if you sold at a loss, TDS was still deducted.
You get a refund when:
- TDS deducted > actual tax owed: Most common scenario. You sold ₹10,00,000 worth of crypto throughout the year, so ₹10,000 TDS was deducted. But your actual profit was only ₹80,000 — so your tax is ₹24,960 (30% + cess). Wait, that's more than ₹10,000, so no refund here. But flip it around...
- Small profit, large volume: You traded ₹50,00,000 in volume (lots of buy-sell cycles) but your net profit was only ₹1,00,000. TDS deducted: ₹50,000. Tax owed: ₹31,200. You'd get a refund of ₹18,800.
- Net loss: You sold ₹20,00,000 through the year but ended with an overall portfolio loss. TDS deducted: ₹20,000. Tax owed: ₹0 (you have no profits). Full ₹20,000 comes back as a refund.
Here's a worked example. Say over FY 2024-25:
- Total sell value on CoinDCX: ₹50,00,000
- TDS deducted (1%): ₹50,000
- Actual net profit (after FIFO): ₹1,00,000
- Tax at 30% + cess: ₹31,200
- Refund: ₹50,000 - ₹31,200 = ₹18,800
Step 1: Check Your TDS in Form 26AS and AIS
Before you file, verify that the TDS deducted by exchanges actually shows up in your tax records. Here's how:
Form 26AS
- Log in to the Income Tax e-Filing portal (incometax.gov.in)
- Go to e-File → Income Tax Returns → View Form 26AS
- You'll be redirected to TRACES
- Look under Part A2 — this is where TDS under Section 194S appears
- Each entry will show the deductor (exchange TAN), amount paid, and TDS deducted
Annual Information Statement (AIS)
- On the same portal, go to Services → AIS
- The AIS has a section for "Tax Deducted at Source" and separately for "Specified Financial Transactions" which includes VDA transactions
- Cross-check that the TDS amounts in AIS match your 26AS and your own records from the exchange
Pro tip — download your exchange's tax statement or TDS certificate for the year. CoinDCX, WazirX, and CoinSwitch all provide these in your account settings or tax section. Compare it line by line with Form 26AS.
Step 2: File Your ITR with Schedule TDS
To claim the TDS refund, you must file an Income Tax Return. There's no other way. Here's the key part:
Choosing the Right ITR Form
- ITR-2 — If you have salary/other income plus crypto gains (no business income)
- ITR-3 — If you treat any crypto activity as business income, or have other business income
Most salaried crypto traders use ITR-2.
Reporting Crypto Income
- Report your VDA income in Schedule VDA — enter each transaction or consolidated figures for each coin
- The net gain goes to "Income from VDA" and is taxed at 30%
Claiming TDS in Schedule TDS
- Go to Schedule TDS2 (TDS other than salary)
- Enter the TAN of each deductor (exchange), the amount on which TDS was deducted, and the TDS amount
- This data should auto-populate if the exchange reported correctly, but always verify and correct if needed
- The total TDS from this schedule gets credited against your total tax liability
When you complete the ITR, the portal calculates: Total Tax Liability minus TDS Credit minus Advance Tax Paid = Refund (if negative) or Tax Payable (if positive). If it shows a refund, make sure your bank account details are correctly linked and pre-validated on the portal.
Step 3: Verify Your Return
After filing, you must verify your ITR within 30 days. Without verification, the return is treated as not filed and you won't get your refund. You can verify via:
- Aadhaar OTP (easiest)
- Net banking
- Bank account EVC
- Physical signed ITR-V sent to CPC Bengaluru (slowest option)
Refund Timeline
Once your return is verified and processed:
- Typical timeline: 3 to 6 months after filing
- Fast cases: Some refunds hit within 2-3 weeks if the return is straightforward and e-verified immediately
- Delayed cases: If selected for scrutiny or if there's a TDS mismatch, it can take longer
The refund is credited directly to your pre-validated bank account. You'll also receive interest under Section 244A at 0.5% per month if the refund is delayed beyond certain timelines — small consolation, but it's something.
Track your refund status at: incometax.gov.in → Services → Know Refund Status
What If Your Exchange TDS Doesn't Show in 26AS?
This happens more often than you'd think, and it's frustrating. Here's what to do:
- Check the quarter: TDS returns are filed quarterly. If you traded in March, the TDS might only reflect in 26AS by June. Give it time after the quarter ends.
- Contact the exchange: Ask CoinDCX/WazirX/CoinSwitch to provide a TDS certificate with their TAN. Confirm they've filed their TDS return (Form 26QE for Section 194S) with the government.
- File a grievance on TRACES: If the exchange confirms they've filed but it still doesn't show, raise a ticket on TRACES (tdscpc.gov.in).
- Still claim it in your ITR: You can still enter the TDS details manually in Schedule TDS2. However, if it doesn't match the government's records, your claim may be adjusted during processing. In that case, you'll get a notice which you can respond to with the exchange's TDS certificate as proof.
One more scenario — if you traded on an international exchange (Binance, KuCoin, Bybit), no TDS was deducted at all. In this case, there's nothing to refund. You owe the full 30% + cess on your profits, and you should've been paying advance tax quarterly. If you haven't, expect Section 234B and 234C interest when you file.
Practical Tips
- File early: Returns filed in July tend to get refunds faster than those filed near the deadline in December.
- Pre-validate your bank account: Do this before filing. If your bank details aren't pre-validated, the refund gets stuck even after processing.
- Use CryptoITR to calculate: Upload your exchange reports, and CryptoITR computes your exact tax liability after TDS credit. You'll know immediately whether you're owed a refund and how much.
- Keep records: Save your exchange TDS certificates, Form 26AS downloads, and ITR acknowledgment for at least 7 years. You never know when you'll need them.
That ₹50,000 or ₹1,00,000 in TDS sitting with the government? It's your money. Don't leave it on the table — file your return and get it back.