Yes, CoinSwitch reports your crypto transactions to the Income Tax Department (ITD). If you thought otherwise and assumed that the 1% TDS on your trades covers your full tax liability, you are slightly mistaken about how crypto taxation works in India. TDS is an advance payment toward your total tax liability, not the settlement.
Moreover, it files your total trading volume with the ITD through SFT every year, and that figure is almost certainly higher than your actual taxable gain. To understand why, it’s important to know how this platform reports to the ITD.
CoinSwitch’s reporting reaches the ITD through three independent channels. Section 194S TDS deducted per trade, annual SFT filings of your combined buy-sell volume, and AIS aggregation via Project Insight. Through these channels the ITD is building a picture of your CoinSwitch account.
This usually leads to a mismatch since there’s a significant difference between what this platform reports and what you are required to file. While TDS reduces tax payable, you must still report every disposal in Schedule VDA and reconcile actual gains against AIS figures using ITR-2 or ITR-3. Otherwise you will end up paying a lot more than you owe. This article outlines each step to ensure you have a clear, compliant path forward.
Key Takeaways
- CoinSwitch is FIU-registered under PMLA and deducts 1% TDS under Section 194S on every VDA transfer above INR 10,000/year for standard users (or up to INR 50,000/year if you qualify as a ‘Specified Person’). The deduction applies at the point of transfer, not at INR withdrawal.
- CoinSwitch files SFT with the ITD covering combined buy-and-sell volume, not net gain. This is the primary cause of AIS inflation for CoinSwitch accounts.
- Filing your ITR without reconciling the gap between your AIS figure and your actual Schedule VDA entry triggers a show-cause notice under Section 148A. A discrepancy above INR 1 lakh is enough for Project Insight to flag it automatically, even if your gain calculation is correct.
- TDS deducted by CoinSwitch reduces your tax liability but does not replace the Schedule VDA filing obligation in ITR-2 or ITR-3.
- For spot trades on CoinSwitch, the exchange is responsible for deducting 1% TDS under Section 194S. For P2P transactions, that responsibility falls on the buyer. Failing to deduct TDS attracts a penalty under Section 271C equal to the exact amount of TDS not deducted, along with monthly interest charges of 1% on delayed deduction under Section 201(1A). If you manage to deduct the TDS on time but delay submitting, that monthly interest jumps to 1.5%.
How CoinSwitch Reports to the Income Tax Department
CoinSwitch’s three reporting channels do not operate as a single pipeline. Each feeds a different part of the ITD’s database, creates a separate record against your PAN, and runs on its own schedule. The table below sets out exactly what each channel does and what the ITD receives from it:
Reporting Channel | What CoinSwich Files | What the ITD Receives |
Section 194S TDS | Deducts 1% TDS on every qualifying VDA transfer above INR 10,000/year (INR 50,000 for specified persons) and files quarterly Form 26QF | TDS credit recorded in Form 26AS and AIS against your PAN. Visible the moment it is filed. |
SFT Filing | Files a Statement of Financial Transactions (SFT) annually covering combined buy-and-sell volume for the financial year | Total trade volume, not net gain. This is the primary source of AIS inflation for CoinSwitch accounts. |
AIS via Project Insight | PAN-linked account data aggregated and cross-referenced automatically | ITD compares all reported data against your filed ITR without manual review. Discrepancies above INR 1 lakh are flagged automatically. |
Note: Under the Budget 2026 reporting norms, exchanges are required to file transaction-level details with the ITD. Non-reporting attracts a penalty of INR 200 per day, and incorrect reporting attracts a penalty of INR 50,000.
How the ITD Tracks Your CoinSwitch Transactions
CoinSwitch’s filing channels are not the only source of data the ITD holds on your account. The following independent sources operate regardless of what any exchange files:
KYC and PAN-Linked Account Data
CoinSwitch’s mandatory KYC process permanently links your account to your PAN before your first trade. Every TDS deduction and every SFT filing CoinSwitch submits goes to the ITD against that PAN. Project Insight then cross-references this data against your filed ITR automatically.
AIS and Project Insight
Annual Information Statement (AIS) is the ITD’s consolidated record of every financial transaction reported against your PAN, drawing information from banks, brokers, mutual funds, and exchanges, including CoinSwitch.
Project Insight compares every AIS entry against your filed ITR automatically. If a discrepancy above INR 1 lakh between the AIS and your filed ITR is detected, it triggers a Show-Cause Notice under Section 148A. The system does not verify whether your gain arithmetic is correct before issuing the notice, it flags the gap first.
Why Your AIS May Overstate Your Crypto Income
Most CoinSwitch traders who receive a Section 148A notice did not make an error in their Schedule VDA. They filed the correct gain figure and still received the notice because they submitted their return without reconciling the AIS figure first. To understand why that gap exists, let us check out an example.
Rohan traded actively on CoinSwitch throughout FY 2025-26. He maintained immaculate records, calculated his gains correctly, and filed on time. To put this into figures:
Detail | Figure |
Total trade volume on CoinSwitch, FY 2025-26 (combined buys and sells) | INR 9,96,000 |
Actual net gain (sale price minus cost of acquisition) | INR 36,000 |
Figure shown in AIS from CoinSwitch SFT filing | INR 9,96,000 |
Figure Rohan entered in Schedule VDA (correct) | INR 36,000 |
Tax at 30% under Section 115BBH on INR 36,000 | INR 10,800 |
4% health and education cess on INR 10,800 | INR 432 |
Total tax payable | INR 11,232 |
AIS vs ITR discrepancy | INR 9,60,000 – exceeds Rs 1 lakh threshold by more than 9x. |
Outcome | Rohan did not reconcile the Rs 9,60,000 discrepancy before filing. Project Insight flagged the gap automatically and triggered a Section 148A Show-Cause Notice. |
Why Does it Happen?
CoinSwitch’s SFT filing reports combined buy-and-sell volume, not net proceeds. Rohan bought Rs 4,80,000 worth of crypto and sold it for Rs 5,16,000, making a gain of Rs 36,000. CoinSwitch reported both the buy side and the sell side to the ITD, giving a total volume figure of Rs 9,96,000. The ITD’s system then compared that Rs 9,96,000 against the Rs 36,000 in Rohan’s Schedule VDA and flagged the difference automatically.
How Common is It?
For every active crypto trader in India, it’s highly likely that the AIS figure would be significantly inflated in comparison with the actual taxable gain. The gap will be different for every trader as it depends on the number of trades placed, and every buy and every sell adds to the reported volume figure independently.
This means a trader who buys and sells the same holding multiple times in a year generates a volume figure that compounds with each transaction, while the actual gain on that holding may remain small. Circling back to the example above, Rohan’s case represents a moderate level of trading activity and still the difference is significant. Active traders with higher frequency will see proportionally larger discrepancies.
What’s the Consequence?
If a discrepancy above Rs 1 lakh is found between what CoinSwitch reported and what you declared in Schedule VDA, you may receive a Section 148A Show-Cause Notice notice. This happens because you did not reconcile the gap before filing, not because the gain calculation was wrong. So, always file a reconciliation note alongside your return to avoid triggering the notice.
How to Download Your CoinSwitch TDS Certificate and Transaction History
CoinSwitch makes both documents available directly inside the app. The TDS certificate is issued quarterly and covers every deduction made during that three-month period. The transaction history downloads as a Tax P&L report covering every trade for the financial year. You’ll need both before you file.
How to Download Your TDS Certificate
Your TDS certificate shows every 1% TDS deduction CoinSwitch made on your qualifying VDA transfers for the selected quarter. Cross-check this against your TDS return filing to confirm the credits are reflected correctly in your AIS. You just have to follow the steps below:
- Open the CoinSwitch app.
- Tap the “Profile” icon on the top-left corner of the screen.
3. Go to “Reports.”
4. Tap on “TDS Certificate.”
5. Select the correct Quarter and Financial Year.
6. Once done, click the “Download TDS Certificate” button.
The certificate downloads as a PDF. Your CA will need this to reconcile TDS credits in Form 26AS against your Schedule VDA entry.
If the certificate is not available directly in the app, check your AIS at incometax.gov.in under the TDS section. CoinSwitch’s deductions will be recorded there against your PAN regardless.
How to Download Your Transaction History
You will need your transaction history to calculate the actual gain for each disposal before entering it in Schedule VDA. The process to download your transaction history on CoinSwitch App is almost the same:
- Open the CoinSwitch app.
- Tap “Profile.”
- Go to “Reports.”
- Select “Tax P&L.”
5. Choose the Financial Year and relevant quarters & Download.
Integrate your CoinSwitch account with KoinX to import the downloaded report directly into KoinX to calculate your gain per disposal, generate the Schedule VDA figures, and produce the AIS reconciliation report before your CA reviews the return.
Common Misconceptions about CoinSwitch and ITD Reporting
Here are a few common misconceptions Coinswitch users have regarding ITD reporting:
Misconception 1: CoinSwitch Does Not Report My Trades to the ITD
Many CoinSwitch users believe their trades only become visible to the ITD when they withdraw money to a bank account. However, the reporting mechanism works very differently. CoinSwitch is FIU-registered under PMLA and files SFT data with the ITD every financial year, covering your total trade volume whether or not any withdrawal takes place.
It also deducts 1% TDS under Section 194S on every qualifying VDA transfer and files that against your PAN quarterly. By the time you sit down to file your return, the ITD already has a record of your CoinSwitch activity. The only question is whether your ITR matches what is already on file.
Misconception 2: TDS Deducted by CoinSwitch Covers My Full Tax Obligation
TDS is an advance payment toward your total tax liability, not a substitute for filing. CoinSwitch deducts 1% of the transfer value on every qualifying transaction and deposits it with the ITD against your PAN. That credit reduces what you owe when you file, but your actual liability under Section 115BBH is 30% of your net gain plus 4% cess.
Reporting every VDA disposal in Schedule VDA and filing ITR-2 or ITR-3 is a separate legal obligation, and it exists regardless of how much TDS was deducted. Skipping Schedule VDA attracts a late filing penalty under Section 234F of up to Rs 5,000, even if the TDS deduction was correct.
Misconception 3: My AIS Figure is My Taxable Income
The AIS figure for a CoinSwitch account reflects SFT-reported trade volume, not taxable gain. CoinSwitch files combined buy-and-sell volume with the ITD, so both sides of every trade are counted. For an active trader, that figure can be significantly higher than the actual gain on those trades.
Entering the AIS figure directly into Schedule VDA leads to a substantial overpayment and an incorrect return. Your Schedule VDA entry must be calculated from your CoinSwitch transaction history using sale price minus cost of acquisition per disposal. The AIS figure is the starting point for reconciliation, not the number that goes into your ITR.
Misconception 4: P2P Trades on CoinSwitch are Invisible to the ITD
For every P2P trade, the buyer is legally required to deduct 1% TDS under Section 194S before transferring payment to the seller. Unlike corporate exchanges that file quarterly returns, an individual buyer must deposit this tax and file a challan-cum-statement using Form 26QE within 30 days from the end of the month in which the deduction was made.
This filing maps the transaction against both the buyer’s and seller’s PANs, making it immediately visible to Project Insight. A buyer who skips this step may think they are off the ITD’s radar, but they are simply accumulating a Section 271C penalty equal to the exact TDS amount not deducted, plus interest on late payment.
Misconception 5: Only INR Cash-Out is Taxable Crypto-to-Crypto Swaps are Not
Section 115BBH makes every VDA disposal a taxable event, including crypto-to-crypto swaps. When you exchange one token for another on CoinSwitch, the INR fair market value of the asset you give up at the time of the swap is treated as the sale consideration. The gain on that value is taxable at 30%, regardless of whether any INR changes hands.
This applies to every token-to-token trade on the platform. Traders who report only their INR withdrawals are understating their Schedule VDA gains, and that gap will appear as a discrepancy in their AIS.
How to Report Your CoinSwitch Trades Correctly
To report your CoinSwitch trades correctly and avoid a Section 148A notice, follow the three steps listed below:
Step 1: Calculate Your Actual Gains from the CoinSwitch Transaction History
Your Schedule VDA entry starts with your CoinSwitch transaction history, not your AIS. Download your Tax P&L report from the app using the steps covered earlier in this article. For each VDA disposal, the gain is calculated as sale price minus cost of acquisition.
For crypto-to-crypto swaps, the INR fair market value of the asset given up at the time of the swap is the sale price. Every disposal must be calculated individually. Aggregating trades into a single figure is not permitted under Schedule VDA.
KoinX imports your CoinSwitch transaction history directly and calculates the gain per disposal automatically, applying the correct treatment under Section 115BBH across spot trades, P2P transactions, and crypto-to-crypto swaps.
Step 2: Reconcile Your Calculated Gains Against Your AIS Before Filing
Before submitting your return, log in to the ITD’s e-filing portal and check your AIS. The CoinSwitch entry will show the SFT-reported volume figure. Compare that figure against the total gains you calculated from the transaction history. If there is a difference, document the reason.
In most cases, the cause is combined buy-and-sell volume being reported rather than net proceeds, as Rohan’s example earlier in this article shows. Attach a reconciliation note to your return explaining the difference to prevent Project Insight from flagging the gap as an unexplained discrepancy. If you have already filed without reconciling, file a revised return under Section 139(5).
Step 3: File Schedule VDA in ITR-2 or ITR-3
Report each VDA disposal individually in Schedule VDA, using the figures calculated in Step 1. Investors with no business income file ITR-2. Traders with income under the head profits and gains of business or profession file ITR-3. Carry the TDS deducted by CoinSwitch as a credit in the TDS schedule of your ITR.
For most active CoinSwitch traders, the hardest part of filing is not calculating the gain. It is reconciling the gap between the SFT-reported volume figure in the AIS and the actual gain figure that goes into Schedule VDA. Doing that manually means cross-referencing every transaction, identifying the exact cause of the discrepancy, and drafting a reconciliation note the ITD will accept.
For a trader with hundreds of transactions across the financial year, this process can take hours and still carries the risk of a missed entry. To avoid this, let KoinX do it all for you. It’s a one stop solution for all your crypto taxation problems. From importing your complete CoinSwitch transaction history to producing an ITR-ready Schedule VDA output KoinX takes care of everything for you. Just integrate your CoinSwitch account with KoinX.
Conclusion
CoinSwitch reports through three independent channels, and the ITD holds more data about a CoinSwitch account than most traders realise. A gap above Rs 1 lakh between the AIS figure and your Schedule VDA entry is enough to trigger a Section 148A notice. So, download your CoinSwitch Tax P&L report, check your AIS at the ITD’s e-filing portal, and compare the two figures before you submit your return. If you have already filed without reconciling, a revised return under Section 139(5) can be filed before the end of the assessment year.
If you handle a lot of CoinSwitch transactions, save yourself the time and frustration of sorting through endless trades by letting KoinX import your transaction history, calculate your Schedule VDA figures, and generate a clean AIS reconciliation report.
Frequently Asked Questions
How do I check what CoinSwitch has reported about me to the ITD?
Log in to the ITD’s e-filing portal at incometax.gov.in and navigate to the AIS tab under the Services category. Your AIS will show the SFT-reported volume figure that CoinSwitch filed against your PAN, along with TDS credits from every qualifying transaction. This is the figure you need to reconcile against your calculated gains before filing Schedule VDA.
Will I get a tax notice if I traded on CoinSwitch but did not file an ITR?
Yes. CoinSwitch files SFT data and TDS deductions against your PAN regardless of whether you file a return. Project Insight cross-references that data against your ITR automatically every year. If no ITR is filed, the system flags the discrepancy and can trigger a notice under Section 148A asking you to explain the unreported income.
Does CoinSwitch deduct TDS on every crypto trade?
CoinSwitch deducts 1% TDS under Section 194S on every qualifying VDA transfer above Rs 10,000 per year for most users, and above Rs 50,000 per year for specified persons. The deduction applies at the point of transfer, not at INR withdrawal. Transfers below the annual threshold do not attract TDS, but they are still reportable in Schedule VDA if they result in a taxable gain.
My AIS shows a much higher figure than my actual gain. What should I do?
This is the volume vs proceeds gap caused by CoinSwitch’s SFT filing. CoinSwitch reports combined buy-and-sell volume to the ITD, not net proceeds, so the AIS figure will almost always be higher than your actual gain. Calculate your actual gain from the CoinSwitch transaction history using sale price minus cost of acquisition per disposal. Attach a reconciliation note to your return explaining the difference before you submit.
Does CoinSwitch report P2P trades to the ITD?
No, exchanges are not liable to deduct and report TDS in P2P trades. The buyer must deduct 1% TDS under Section 194S and file it against both PANs. A buyer who skips TDS on a P2P trade does not avoid ITD visibility. It attracts a Section 271C penalty equal to the exact TDS amount not deducted.
I already filed my ITR without reconciling the AIS gap. What should I do now?
File a revised return under Section 139(5) before the end of the relevant assessment year. A revised return allows you to attach the reconciliation note explaining the difference between the AIS volume figure and your declared Schedule VDA gains. Filing a revised return proactively is faster and less costly than responding to a Section 148A notice after the assessment window opens.
