TDS on cryptocurrency: What it means and how it shapes crypto trading

When you trade cryptocurrency, TDS on cryptocurrency, a tax deduction at source applied to crypto transactions in certain countries. Also known as tax withholding on digital assets, it means a portion of your trade value is automatically taken by the exchange or platform before you receive your funds. This isn’t just paperwork—it’s a real-time tax gate that changes how you plan trades, choose exchanges, and track your profits.

TDS on cryptocurrency isn’t universal, but where it’s enforced—like in India, where exchanges must withhold 1% on every trade—it forces traders to rethink their strategies. If you’re buying SOL for $1,000, you don’t get $1,000 worth of SOL—you get $990. That $10 is gone, withheld by the exchange and sent to the government. It doesn’t matter if you’re holding, swapping, or selling later. The tax is taken at the moment of purchase. This makes TDS different from capital gains tax, which you pay when you cash out. TDS hits you upfront, no matter the outcome.

It also affects how platforms operate. Exchanges that don’t comply with TDS rules get blocked or fined. That’s why Indian users see fewer foreign platforms—they can’t legally process trades without TDS. Meanwhile, compliant platforms like KoinBX and ZebPay built their entire UX around it, showing you the tax amount before you click confirm. You can’t ignore it. Even if you’re trading small amounts, TDS adds up over time. And if you’re using decentralized exchanges like KyberSwap Classic or Huckleberry, you might think you’re safe—but regulators are catching up. Some jurisdictions now require DEX users to self-report TDS-equivalent taxes, even if the platform doesn’t withhold it.

What does this mean for you? If you’re trading crypto seriously, you need to treat TDS like a cost of doing business—like a fee or slippage. Track every transaction where TDS was applied. Save your tax receipts. Don’t assume your exchange will report it to the tax authority; in many places, you still have to file manually. And if you’re looking at new tokens or niche DEXs like Ardor DEX or GroveX, ask: does this platform handle TDS? If not, you’re on the hook for reporting it yourself.

There’s no getting around TDS on cryptocurrency if you’re in a regulated market. It’s not a loophole—it’s a rule. The question isn’t whether it applies to you, but how well you’re preparing for it. Below, you’ll find real-world breakdowns of how TDS impacts different exchanges, what happens when you ignore it, and how to track your crypto taxes without going insane.