India's crypto tax structure has a weird technical gap. The 30% flat tax on gains + 1% TDS on transactions creates a situation where high-frequency traders get crushed by the TDS alone, regardless of profitability. The loophole? Peer-to-peer transfers and certain DeFi protocols operating outside centralized exchanges aren't automatically captured by the TDS system. The tax code assumes all crypto activity flows through KYC'd exchanges, but on-chain activity is pseudonymous by design. This creates enforcement friction: the Income Tax Department can see exchange data but struggles with wallet-to-wallet movements. Technically, you're supposed to self-report everything, but the architecture of blockchain makes tracking difficult without sophisticated chain analysis tools. Not financial or legal advice, but the system's design assumes a level of surveillance that doesn't match how decentralized networks actually function.