Do you use Binance in India? Tax deadlines are strictly targeting the 1% TDS Dodgers

Indian tax authorities have used offshore exchanges such as Binance to intensify their crackdown on cryptocurrency traders. According to the Economic Times, the focus is on individuals who have failed to comply with the mandatory 1% tax deducted in the Source (TDS) applicable to crypto trading in India.

India’s crypto tax regulations require that all applicable crypto transactions collect a TD of 1%. Domestic Indian exchanges have implemented this requirement, but reports show that many users have moved to offshore platforms, particularly Binance, to bypass. Tax authorities are now targeting these users directly and taking stricter measures against non-compliance violations.

Not only profit, but also taxes on sales

Crypto traders face unexpected tax burdens based on the way the authorities apply their taxes. Instead of taxing profits alone, officials reportedly charge 30% tax on the total sales (total transaction value) of transactions.

For example, based on this punitive calculation, traders generating 100 lakh to 10 pounds of profit in total trade could still face a tax valuation of 30 pounds. This strict measure will serve as both a penalty for non-compliance violations and a deterrent against the use of platforms that do not comply with India’s tax laws.

This strict measure serves both as a penalty for non-compliance violations and as a potential deterrent against the use of platforms that do not comply with India’s tax laws.

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Why are Binance users specifically targeted?

Binance is currently not registered as an Indian reporting entity. It does not implement the necessary TDS collections on a platform for Indian users, putting users at risk of regulatory action.

Authorities reportedly use bank data and international cooperation agreements to track non-compliant traders. Those placed during the investigation should either provide evidence of TDS payments for the transaction or justify why the rules do not apply to a particular situation.

In particular, registered Indian exchanges such as Wazirx and Coinswitch automatically subtract 1% TD from applicable transactions before processing. In contrast, Binance promotes peer-to-peer (P2P) trading options, which can make users more easily overlook individual TDS reporting obligations.

Under Indian law, both parties in the Forex Cipher Swap must pay 1% TD. Traders are currently advised to follow the law fully, even when using foreign exchanges, to avoid financial penalties.

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The crackdown includes non-resident Indians (NRIs) who have moved assets from local to foreign exchanges over the past two years, beyond individual traders. Indian authorities have also tightened restrictions on the withdrawal of crypto to curb potential money laundering and other illegal activities.

Strict enforcement could prevent traders from using non-compliant offshore platforms and drive more activities towards domestic registration exchanges that automatically comply with local tax credits and reporting laws.