Theory is one thing; the actual line-by-line math on a P2P trade is what people get wrong on their first ITR. Let's walk through one trade in full detail.
The trade
Day 1: You buy 1,096 USDT on Binance P2P at ₹91.20 each. Total INR paid: ₹99,955. Counterparty (or platform) deducts 1% TDS = ₹999.55. Net INR paid by you to the seller: ₹99,955 (TDS handled separately, depending on platform mechanic).
Day 30: You sell 1,096 USDT on Bybit P2P at ₹92.40 each. Total INR received: ₹1,01,270. The buyer deducts 1% TDS = ₹1,012.70.
The capital-gains math
Cost of acquisition: ₹99,955. Sale consideration: ₹1,01,270. Gain: ₹1,315.
Tax under 115BBH: 30% × ₹1,315 = ₹394.50. Health & Education cess @ 4%: ₹15.78. Total tax: ₹410.28.
TDS reconciliation
TDS already deducted: ₹999.55 (on buy) + ₹1,012.70 (on sell) = ₹2,012.25 reflected in your Form 26AS / AIS.
Net effect at ITR time: tax due ₹410.28 minus TDS credit ₹2,012.25 = refund of ₹1,601.97. (You'd of course aggregate across all your trades for the year, not per trade.)
Why the refund > tax
TDS at 1% of gross trade value, at high turnover, vastly exceeds 30% of net gains for most traders. Active traders consistently get refunds, which is why filing matters even if you 'didn't make money'. Skip the ITR and the TDS stays with the government.
Key takeaways
- 30% applies to net gain only; 1% TDS applies to gross trade value.
- High-turnover traders typically over-pay TDS and recover via ITR.
- Always file — unfiled TDS becomes free money for the government.
- Aggregate by asset and month for a clean Schedule VDA.
