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*.

1. Legal status: Legal to hold and trade. Not legal tender.
2. Tax: 30% flat tax on profit + 4% surcharge / cess + 1% TDS at source on every transaction value (≥ ₹10,000 / day).
3. Loss set-off: Disallowed — losses on one VDA cannot be set off against gains on another.
4. 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.
5. Regulator: Financial Intelligence Unit India (FIU-IND) under PMLA. RBI for monetary policy + foreign exchange (FEMA). SEBI has limited jurisdiction over crypto-derivatives only.
6. Status of CBDC: The Digital Rupee (e₹) by RBI is legal tender; private cryptos are not.

1. 2013-2017: RBI issues advisories warning citizens about crypto risks. No ban.
2. 6 April 2018: RBI circular bars regulated entities (banks, NBFCs) from servicing crypto businesses.
3. 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.
4. 1 February 2022: Finance Bill 2022 introduces §115BBH (30% flat tax) and §194S (1% TDS) on Virtual Digital Assets (VDAs).
5. 7 March 2023: Government brings VDA service providers under PMLA reporting obligations.
6. November 2023: India Presidency at G20 produces the G20 Roadmap on Crypto-Assets, leading to the IMF-FSB joint paper.
7. 2024-2025: 22 large foreign exchanges blocked for non-compliance with PMLA registration; later restored after FIU-IND registration.
8. November 2025: DPDP Act in force — VASPs must comply with data-fiduciary obligations.

1. Buying / selling on a FIU-IND-registered exchange (CoinDCX, ZebPay, WazirX, CoinSwitch, Mudrex, etc.).
2. Holding Bitcoin / Ether / other VDAs in your name.
3. Receiving crypto as payment from abroad — subject to FEMA + LRS limits + tax.
4. Mining privately — taxable as VDA income.
5. Cross-border transfers subject to FEMA's $250,000/year LRS limit.

1. Using crypto as legal tender for everyday transactions — vendors are not bound to accept it.
2. Operating an exchange without FIU-IND registration — the entity is reportable under PMLA.
3. Marketing / advertising crypto products without ASCI-mandated risk disclosure.
4. Crypto derivatives traded on Indian exchanges — SEBI does not yet allow this.

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 AI RTI Drafter to draft the application.

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, © 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.

1. “Crypto is illegal” — wrong. It is legal to hold/trade. Only the RBI 2018 banking restriction was struck down in 2020.
2. “30% tax only on big trades” — wrong. All VDA gains are 30% regardless of size.
3. “I can offset losses” — wrong. §115BBH(3) disallows set-off across VDAs and against other heads of income.
4. “India hasn't recognised crypto” — partially right. It is recognised in tax law (VDA = Virtual Digital Asset) but not legal tender.

• 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.
• FIU-IND official site · RBI · Income Tax Department.

• Complete DPDP Act 2023 guide
• RTI Act explanations
• AI RTI Drafter
• RTI case-law database
• RTI Act, 2005

Last reviewed: 4 May 2026.