TDS · Section 194S · FY 2026–27
Section 194S: TDS on Virtual Digital Asset (VDA) Transfers
Section 194S (TDS on Virtual Digital Asset (VDA) Transfers): the TDS rate is 1%. Threshold: Rs. 10,000 per financial year per buyer (Rs. 50,000 for specified persons under Section 194S(1)(b)).
Section 194S applies 1% TDS on payments made for the transfer of Virtual Digital Assets — crypto, NFTs, and similar instruments. Applies to Indian exchanges as well as P2P transfers.
Rate source: Income Tax Department TDS rate chart
1%
1%
Threshold
₹10K a year
Who deducts
Crypto exchanges, payment intermediaries, and direct buyers of VDAs.
No PAN
20%
Shows up in
Form 26AS & AIS, quarterly
What it looks like on a real payment
Worked exampleSec 194S
Amount payable to you₹1,00,000
TDS @ 1%− ₹1,000
You receive₹99,000
The ₹1,000 is not lost — it is pre-paid tax, credited in your 26AS and adjusted at filing.
What this means for you
The 1% TDS is set against your 30% VDA tax — usually absorbed rather than refunded, since the headline VDA rate is high. Reconcile it in 26AS regardless.
194S applies 1% TDS on crypto / VDA transfers. If you take part of your fee in crypto, or trade VDAs, the exchange or buyer deducts 1% on the transfer value (threshold Rs. 10,000/year, or Rs. 50,000 for specified persons). VDA gains are taxed at a flat 30% under Section 115BBH with no expense set-off except cost of acquisition — the 194S TDS is a credit against that.
When your client must deposit it — and report it
The client must deposit TDS by the 7th of the month after deduction (30 April for March). It reaches your 26AS only after they file the quarterly TDS statement (Form 26Q), due on these dates — which is why a deduction in March can be invisible until 31 May:
Form 26Q · quarterlyFY 2026–27
Q1 — Apr to Jun31 July
Q2 — Jul to Sep31 October
Q3 — Oct to Dec31 January
Q4 — Jan to Mar31 May
FAQ
What is the TDS rate under Section 194S?
Who deducts TDS under Section 194S?
What is the threshold for Section 194S TDS?
Is TDS under Section 194S deducted on the GST-inclusive amount?
How do I claim TDS deducted under Section 194S in my ITR?
Not sure how to claim this TDS back? Read the freelancer’s guide to TDS deducted by clients — how it lands in your 26AS and how you reclaim it in your ITR.
For the CA reading this
The deadline sheet you already send, with your name on it
Every statutory date for the month — GST returns, advance tax, and the dates your client's own customers owe them: when the TDS they withheld must reach the department, and when the certificate is due. Add your firm's name and forward it as it stands. No signup, no email, nothing to accept.
The image is the one that travels on WhatsApp. Dates are statutory, not advice — the sheet says which rows bind whom.
Sources
Rates as notified for FY 2026–27 and can change. General information, not tax advice. Verify with your CA before you file.
Every deduction, tracked to the rupee
Your TDS credits, never lost.
HourSlip logs the expected deduction on every invoice and reconciles it against 26AS — so filing season has no surprises.
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