Is Crypto Legal in India? 2026 Guide

For the full legal background and policy history, see Is Cryptocurrency Legal in India? - full explainer.

Crypto is not banned and not legal tender. The Indian government treats crypto as a Virtual Digital Asset (VDA) - a taxable asset class with strict reporting and compliance obligations, but no general criminal prohibition on holding or trading it.

Three laws together shape the current position:

• Income Tax Act, 1961 - Section 2(47A): Defines “Virtual Digital Asset” to include any cryptographically generated code, token, or information - covering Bitcoin, Ether, and similar assets. NFTs notified by the Central Government are also VDAs.
• Finance Act, 2022 - Sections 115BBH and 194S: Set the 30% tax on VDA income and 1% TDS on VDA transfers. The 30% income tax rate applied from April 1, 2022 (assessment year 2023-24); the 1% TDS under Section 194S came into force from July 1, 2022.
• PMLA, 2002 - Ministry of Finance Notification S.O. 1072(E) dated March 7, 2023: Brought all VDA service providers - exchanges, wallet providers, token custodians - under the Prevention of Money Laundering Act as “reporting entities”. This made FIU-IND registration mandatory.

The Supreme Court connection. In 2018, the Reserve Bank of India (RBI) had directed banks not to serve crypto businesses. On March 4, 2020, the Supreme Court struck down that circular in Internet and Mobile Association of India v Reserve Bank of India (2020 SCC Online SC 275), ruling the RBI's restriction was disproportionate. Banks can now support crypto-related accounts. The RBI has not appealed; its current position is that crypto is not legal tender, but it does not restrict banking services for FIU-registered exchanges.

SEBI's proposed role. SEBI has recommended a multi-regulator framework for crypto, under which it would oversee tokens that function like securities - those offering dividends, voting rights, or returns tied to a third party's efforts. As of June 2026, no formal SEBI notification or legislation has been issued granting it explicit crypto oversight powers; the regulatory framework remains under discussion between SEBI, RBI, and the Finance Ministry. If you hold tokens that resemble securities (ICOs, STOs), monitor SEBI's official circulars at sebi.gov.in for any future guidance.

Under Section 115BBH, any income from transfer of a VDA is taxed at 30%, regardless of how long you held it or whether it was a gain from trading, swapping, or receiving crypto as payment. Add 4% health and education cess, and the effective rate is 31.2% (plus any applicable surcharge for higher incomes).

What you can and cannot deduct:

• You can deduct your cost of acquisition (what you paid for the crypto).
• You cannot deduct internet fees, exchange fees, wallet charges, or any other expense.
• Losses from VDA transactions cannot be set off against any other income - salary, house property, or other capital gains. They also cannot be carried forward to the next year.

When a crypto exchange or buyer pays you for a VDA transfer, 1% of the payment must be deducted as TDS before it reaches you. TDS thresholds:

• For most individuals: Rs 50,000 per financial year (i.e., TDS kicks in once your total VDA sale proceeds in a year cross Rs 50,000).
• For individuals or HUFs with business turnover under Rs 1 crore (Rs 50 lakh for specified professions): the Rs 50,000 threshold still applies.
• For others (companies, large traders): Rs 10,000 per financial year.

TDS is not an additional tax - you claim credit for it against your total income tax liability when you file your ITR. Check your Annual Information Statement (AIS) and Form 26AS to confirm the TDS amounts exchanges have deposited.

Report VDA income under Schedule VDA in your Income Tax Return. Use ITR-2 if treating crypto as capital gains, or ITR-3 if treating it as business income. The correct schedule matters - misreporting or skipping it can trigger notices.

If you receive crypto as a gift worth more than Rs 50,000 from a non-relative in a financial year, the entire amount is taxable as income from other sources in the year received - not at 30% but at your applicable slab rate. Gifts from close relatives (as defined in the Income Tax Act) are exempt.

The March 2023 PMLA notification requires any Virtual Digital Asset Service Provider (VDASP) to register with the Financial Intelligence Unit - India (FIU-IND) and follow Anti-Money-Laundering and Countering the Financing of Terrorism (AML/CFT) guidelines. Updated AML/CFT guidelines were issued on January 8, 2026 and are now the operative framework.

Who must register:

1. Exchanges converting INR to VDA or VDA to INR
2. Platforms facilitating crypto-to-crypto swaps
3. VDA custodians and wallet providers
4. Entities executing VDA transfers on behalf of customers
5. Platforms intermediating token issuances

As of FY 2024-25, the FIU-IND Annual Report confirms 49 VDASPs registered - 45 domestic platforms and 4 offshore platforms that serve Indian users and have accepted local compliance obligations.

What registered exchanges must do:

1. Complete KYC and due diligence for every customer
2. Monitor transactions and file Suspicious Transaction Reports (STRs)
3. Maintain transaction records for at least five years
4. Follow the “Travel Rule” - passing sender and recipient information on VDA transfers
5. Appoint a Principal Officer and Designated Director who are accountable to FIU-IND

Penalties for non-registered platforms. Under Section 13 of PMLA, penalties can reach Rs 1,00,000 per violation. In practice, FIU-IND has issued show-cause notices to offshore platforms and directed MEITY to block non-compliant exchanges' URLs and apps. Binance paid Rs 18.82 crore and Bybit paid Rs 9.27 crore in enforcement settlements.

There is no publicly searchable click-through registry, but you can verify in two ways:

1. Check fiuindia.gov.in directly. The FIU-IND website (https://fiuindia.gov.in) and its FINnet 2.0 portal are the authoritative source for registered reporting entities. If an exchange is not on the list, treat it as unregistered.
2. Look for the exchange's own disclosure. FIU-registered exchanges display their Reporting Entity ID and typically publish their registration status in their compliance or legal pages.

Exchanges that the FIU-IND Annual Report 2024-25 confirms as registered include CoinDCX, WazirX, ZebPay, CoinSwitch, and Bitbns, among others. This list is not exhaustive - 49 entities are registered in total.

Red flags for unregistered or illegal platforms:

• No KYC requirement to open an account or deposit
• Promises of guaranteed returns or fixed daily profits
• Pressure to recruit others (pyramid structure)
• No Indian address, grievance officer, or legal page
• Not accessible via a verified Indian app store listing

For reporting a suspected fraud or scam exchange, see crypto scam recovery India.

1. Trade only on FIU-registered, KYC-compliant exchanges.
2. Export your full transaction history at financial year end (April-March) - most exchanges offer a CSV download.
3. Calculate cost of acquisition for every purchase; keep invoices, bank statements, and UPI transaction IDs.
4. Verify TDS deducted appears correctly in your AIS on the Income Tax portal (incometaxindia.gov.in).
5. Report under Schedule VDA in ITR-2 or ITR-3 before the due date.
6. Never share seed phrases, private keys, or OTPs with anyone.
7. If a platform offers “no tax, no KYC” crypto trading, it is operating illegally in India.

• It is not accepted as payment for taxes, government fees, or court fines.
• Merchants are not legally required to accept crypto.
• FEMA restrictions apply if you are sending crypto cross-border or receiving foreign crypto; consult a tax professional before large cross-border transactions.
• Crypto cannot substitute for the Digital Rupee (e-RUPI/e-INR), which is the RBI's Central Bank Digital Currency and the only digital legal tender.

India is aligned with the OECD Crypto-Asset Reporting Framework (CARF), under which Indian exchanges will be required to share transaction data with foreign tax authorities and vice versa from April 1, 2027. If you have foreign crypto accounts or receive crypto from international platforms, that data will eventually be visible to Indian tax authorities. Start keeping records now.

No. Holding Bitcoin or any other VDA is not a criminal offence in India as of 2026. There is no ban on owning, buying, or selling crypto. However, you must declare and pay tax on any income from VDA transfers under Section 115BBH of the Income Tax Act, and use only FIU-registered exchanges.

Yes, Section 115BBH taxes all VDA income at 30% regardless of the amount, with no basic exemption threshold that applies specifically to VDA income. However, if your total income in a year (salary + VDA gains + other sources combined) is below the basic exemption limit, you may not have a tax liability. A tax professional can advise on your specific situation.

No. Section 115BBH explicitly bars setting off VDA losses against any other income or carrying them forward. A bad year in crypto cannot reduce the tax on your salary, rental income, or equity mutual fund gains.

Check whether the exchange is registered as a reporting entity with FIU-IND. You can verify at https://fiuindia.gov.in or ask the platform for its FIU Reporting Entity ID. All registered exchanges must also enforce KYC before allowing deposits or withdrawals.

The exchange may be blocked in India - FIU-IND and MEITY can direct ISPs to block platforms that operate without registration. Your transactions on such a platform are also harder to document for ITR purposes, and the exchange has no obligation to file STRs that protect you if something goes wrong.

TDS under Section 194S applies on the total sale proceeds for a financial year once they exceed the threshold (Rs 50,000 for most individuals). The exchange deducts 1% from each payout. You can claim this as tax already paid when filing your ITR - it is not an extra tax on top of the 30%, but an advance collection of it.

• Cryptocurrency legal India 2026 - full legal background and policy history
• Crypto tax and scam warning guide India - detailed tax filing and fraud prevention
• Crypto scam recovery India - what to do if you are cheated

For a broader guide to using government information rights as a citizen, see The RTI Playbook.