Shadow Markets, Missing Taxes: How Offshore Crypto Platforms Keep Indian Trading Outside the 1% TDS Net

India’s crypto tax framework rests on two pillars: a 30% flat tax on gains under Section 1ISBBH and a 1% tax deducted at source (TDS) on consideration paid for transfers under Section 1948.

- TBG NETWORK

The intent behind the 1% TDS is not merely revenue collection—it serves as a tracking rail that captures transactions in the taxpayer’s AIS/26AS, enabling subsequent income-tax enforcement. This architecture works when trades occur on Indian exchanges that withhold TDS at source. It breaks down when trading migrates to offshore platforms that cater to Indian users but do not deduct TDS.