Right to Information Wiki
Bitcoin and cryptocurrency in India — legal status 2026

Bitcoin and cryptocurrencies in India 2026 - legal but heavily taxed (30% flat + 1% TDS). Not legal tender. PMLA + DPDP + IT Act compliance for VASPs. Citizen guide.

no way to compare when less than two revisions

Differences

This shows you the differences between two versions of the page.


—bitcoin-india-legal-status [2026/05/04 03:28] (current) – created - external edit 127.0.0.1
Line 1: Line 1:
 +{{htmlmetatags>metatag-keywords=(bitcoin India legal status,cryptocurrency legal India,VDA tax 2022,30 percent crypto tax,RBI crypto ban,DPDP Act crypto,Section 115BBH)
 +metatag-description=(Bitcoin and cryptocurrencies in India 2026 - legal but heavily taxed (30% flat + 1% TDS). Not legal tender. PMLA + DPDP + IT Act compliance for VASPs. Citizen guide.)}}
 +
 +====== Bitcoin and cryptocurrency in India — legal status 2026 ======
 +
 +**Bitcoin and other cryptocurrencies are legal to hold and trade in India, but they are not legal tender. Profits are taxed at a flat 30% under Section 115BBH of the Income Tax Act, 1961 (introduced by the Finance Act, 2022), with a 1% TDS on every disposal. The Reserve Bank of India is hostile but no longer has a ban; the 2018 RBI circular was struck down by the Supreme Court in March 2020 in *Internet and Mobile Association of India v. RBI*.**
 +
 +===== Quick answer =====
 +
 +  - **Legal status**: Legal to hold and trade. **Not legal tender**.
 +  - **Tax**: **30% flat tax** on profit + **4% surcharge / cess** + **1% TDS** at source on every transaction value (≥ ₹10,000 / day).
 +  - **Loss set-off**: **Disallowed** — losses on one VDA cannot be set off against gains on another.
 +  - **Statutory framework**: Section 115BBH of the **Income Tax Act, 1961** (added by the Finance Act 2022). PMLA 2002 brought VASPs under reporting obligations from March 2023.
 +  - **Regulator**: **Financial Intelligence Unit India (FIU-IND)** under PMLA. **RBI** for monetary policy + foreign exchange (FEMA). **SEBI** has limited jurisdiction over crypto-derivatives only.
 +  - **Status of CBDC**: The **Digital Rupee (e₹)** by RBI is legal tender; private cryptos are not.
 +
 +===== Timeline of key events =====
 +
 +  - **2013-2017**: RBI issues advisories warning citizens about crypto risks. No ban.
 +  - **6 April 2018**: RBI circular bars regulated entities (banks, NBFCs) from servicing crypto businesses.
 +  - **4 March 2020**: Supreme Court strikes down the 2018 circular in *Internet and Mobile Association of India v. RBI*, (2020) 10 SCC 274 — held the circular was disproportionate; RBI had not shown "actual injury" to regulated entities.
 +  - **1 February 2022**: Finance Bill 2022 introduces §115BBH (30% flat tax) and §194S (1% TDS) on Virtual Digital Assets (VDAs).
 +  - **7 March 2023**: Government brings VDA service providers under PMLA reporting obligations.
 +  - **November 2023**: India Presidency at G20 produces the **G20 Roadmap on Crypto-Assets**, leading to the **IMF-FSB joint paper**.
 +  - **2024-2025**: 22 large foreign exchanges blocked for non-compliance with PMLA registration; later restored after FIU-IND registration.
 +  - **November 2025**: DPDP Act in force — VASPs must comply with data-fiduciary obligations.
 +
 +===== What's legal in 2026 =====
 +
 +  - **Buying / selling on a FIU-IND-registered exchange** (CoinDCX, ZebPay, WazirX, CoinSwitch, Mudrex, etc.).
 +  - **Holding** Bitcoin / Ether / other VDAs in your name.
 +  - **Receiving** crypto as payment from abroad — subject to FEMA + LRS limits + tax.
 +  - **Mining** privately — taxable as VDA income.
 +  - **Cross-border transfers** subject to FEMA's $250,000/year LRS limit.
 +
 +===== What's NOT legal =====
 +
 +  - Using crypto as **legal tender** for everyday transactions — vendors are not bound to accept it.
 +  - **Operating an exchange without FIU-IND registration** — the entity is reportable under PMLA.
 +  - **Marketing / advertising crypto products** without ASCI-mandated risk disclosure.
 +  - **Crypto derivatives traded on Indian exchanges** — SEBI does not yet allow this.
 +
 +===== File an RTI =====
 +
 +If your tax notice mentions crypto, your bank closed your account citing crypto activity, or a regulator's letter is unclear, you can file an RTI:
 +
 +  * To **CBDT / Income Tax Department PIO** for tax-circular interpretation of §115BBH or §194S.
 +  * To **RBI PIO** (under §2(h) of RTI Act 2005, RBI is a public authority) for clarifications on FEMA + crypto.
 +  * To **FIU-IND PIO** for queries on VASP registration status.
 +
 +Use our [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]] to draft the application.
 +
 +===== Real-life example: Aarav's frozen exchange withdrawal =====
 +
 +Aarav, 26, freelance developer in Bengaluru, traded on a foreign exchange (Binance) before its India re-registration in 2024. After re-registration, his ₹6.2 lakh balance was frozen pending KYC re-verification. Customer support did not respond. He filed an **RTI to FIU-IND PIO** on 10 March 2025 asking for: (a) the registration status of Binance India as on date, (b) the procedure for users with frozen balances, (c) the regulatory timeline for KYC re-verification. **Reply on 1 April 2025 (Day 22)**: Binance had completed re-registration on 14 February; KYC re-verification was the user's responsibility under FATF rules; FIU-IND had no power to release individual balances but the user could escalate to the **Banking Ombudsman** if a fiat-rail bank was the bottleneck. Aarav re-submitted KYC, balance unfrozen on 8 April. **Total recovery time: 28 days.**
 +
 +===== Common mistakes =====
 +
 +  - **"Crypto is illegal"** — wrong. It is legal to hold/trade. Only the RBI 2018 banking restriction was struck down in 2020.
 +  - **"30% tax only on big trades"** — wrong. **All VDA gains** are 30% regardless of size.
 +  - **"I can offset losses"** — wrong. **§115BBH(3)** disallows set-off across VDAs and against other heads of income.
 +  - **"India hasn't recognised crypto"** — partially right. It is recognised in tax law (VDA = Virtual Digital Asset) but not legal tender.
 +
 +===== Citations and sources =====
 +
 +  * **Income Tax Act, 1961**, **§115BBH** (30% tax on VDAs) and **§194S** (1% TDS), introduced by the **Finance Act 2022**.
 +  * **Internet and Mobile Association of India v. Reserve Bank of India**, **(2020) 10 SCC 274** — SC strikes down 2018 RBI circular.
 +  * **Prevention of Money-Laundering Act, 2002**, as amended by the **Finance Act 2023** — VDAs under PMLA reporting.
 +  * **Foreign Exchange Management Act, 1999** — applies to cross-border crypto transfers.
 +  * **Digital Personal Data Protection Act, 2023** — VASP data-fiduciary obligations from 14 November 2025.
 +  * [[https://www.fiuindia.gov.in|FIU-IND official site]] · [[https://www.rbi.org.in|RBI]] · [[https://www.incometax.gov.in|Income Tax Department]].
 +
 +===== Related on RTI Wiki =====
 +
 +  * [[:dpdp-act-2023-complete-guide|Complete DPDP Act 2023 guide]]
 +  * [[:explanations:start|RTI Act explanations]]
 +  * [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]]
 +  * [[:cases|RTI case-law database]]
 +  * [[:act|RTI Act, 2005]]
 +
 +//Last reviewed: 4 May 2026.//
 +
 +{{tag>bitcoin cryptocurrency vda virtual-digital-asset section-115bbh section-194s pmla rbi-2018-circular fiu-ind 2026}}