Yes, all of it. Section 194S obliges deduction only where the payment is 'to any resident', so an offshore seller or platform usually produces no 1% deduction and no AIS entry — but a resident's gains are taxed under s.115BBH whatever platform they arose on, Schedule VDA still has to be filled transaction by transaction, and the holding may also have to be reported in Schedule FA. The absence of a TDS trail is an evidence problem for the department today and a disclosure problem for the assessee later.
Start with the words of the section. Section 194S(1) applies to 'Any person responsible for paying to any resident any sum by way of consideration for transfer of a virtual digital asset'. Where the counterparty is a non-resident — a foreign exchange acting as principal, or a foreign seller in a peer-to-peer trade — s.194S does not apply on its terms. What may apply instead is s.195, which governs payments to a non-resident of sums chargeable to tax in India, and that turns on whether the non-resident's income is chargeable here at all. No decision, circular or ruling was found dealing with the situs of a crypto-asset for that purpose, so this is an open question and should be treated as one rather than assumed either way.
What is not open is the charge on the resident. Section 115BBH applies to income from the transfer of a virtual digital asset included in the total income of an assessee; it does not ask where the exchange is. A resident and ordinarily resident individual is taxed on global income, so gains on Binance or on a self-custodied wallet are taxed at 30% with cost of acquisition as the only deduction and no set-off, exactly as they would be on an Indian exchange. Schedule VDA is filled the same way, transaction by transaction. The only difference is that nothing arrives to corroborate it — and that cuts both ways, because there is also nothing to corroborate the cost of acquisition when the officer asks.
The reporting question that gets missed is Schedule FA. The instruction is that a resident must disclose foreign assets and accounts held as legal owner, beneficial owner or beneficiary. Whether a crypto balance on an offshore exchange is such an asset is not settled: the schedule has no crypto row, and practitioner guidance is to review the holding against the existing Schedule FA categories rather than to dismiss it, including where no transactions took place during the year. That caution is worth taking seriously because the consequence of getting it wrong is not an income-tax addition but exposure under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, where non-disclosure of a foreign asset attracts a flat penalty reported at Rs 10 lakh. No decision was found on whether crypto on an offshore platform is a foreign asset for that purpose.
Then there is the assumption that silence in the AIS means nothing to report. Offshore activity does not appear in the AIS the way a domestic exchange's TDS reporting does, but the department is not confined to the AIS: fiat moves through the banking channel to get to a foreign platform and back, and from 1 April 2026 the s.285BAA framework — the domestic leg of the OECD Crypto-Asset Reporting Framework — is built to bring in cross-border information. A holding that is invisible today is not invisible for the life of the assessment.
Practically this changes three things in the file. Advance tax has to be paid, because there is no 1% credit coming and no year-end adjustment to fall back on. The cost record has to be kept by the client, because no exchange will produce it on demand years later and the department will treat an unproved cost as nil. And where past years were filed without the offshore trades, the correction route is a revised return under s.139(5) if the year is still open, or an updated return under s.139(8A) — which is not available once a search or survey has begun.
The client's reasoning is almost always 'no TDS, no AIS entry, nothing to report', and it is wrong on the charge, probably wrong on Schedule FA, and expensive on both. Getting it right early is also cheap: the same trade log that supports Schedule VDA supports the Schedule FA review, and the advance tax that avoids s.234B is a fraction of the penalty exposure.
My protocol has an MFN clause and I applied the lower rate India later agreed with an OECD member. Was I entitled to?
A foreign professional worked on our matter in India but we neither briefed him nor paid him. Can we be treated as his agent and made liable for his tax?
The Tribunal recalled its whole order on my miscellaneous application. Will that recall survive?
My client is the Indian agent of a foreign cruise ship that sails round trips out of Mumbai. The Assessing Officer says a cruise is entertainment and hospitality, not carriage of passengers, so s.44B does not apply and he wants the s.195 withholding worked out on 25% of the fare instead of 7.5%. Can he do that?
My Indian payer did not deduct tax at source and paid me gross. The Assessing Officer says I should have paid advance tax and has charged s.234B interest. Which years can he do that for?
My Indian contract says my pay is free of Indian tax and the Indian company pays the tax for me. Is that tax itself taxable in my hands?
You pay a foreign supplier for software. Is that royalty, and must you deduct TDS?
We had access to an Indian venue for only a few days in the year. Can that be a permanent establishment?
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