You can buy, sell, and hold crypto in India — but it is heavily taxed, monitored under anti-money-laundering law, and not recognised as legal tender. This guide tells you exactly what is allowed in 2026.

• Legal: holding, buying, selling, and gifting crypto is not banned in India (2026).
• Not legal tender: you cannot pay rent, salary, or any debt in crypto.
• Tax: a flat 30% tax on all crypto profits + 1% TDS on every transfer above ₹10,000 (₹50,000 for individuals).
• Losses cannot be set off against any other income, and cannot be carried forward.
• All Indian crypto exchanges must be registered with FIU-IND under PMLA.
• RBI does not recognise crypto; e-Rupee (CBDC) is the only digital currency RBI issues.
• Foreign exchanges (Binance, KuCoin, etc.) are blocked — using them risks PMLA scrutiny.

• Income Tax Act, 1961 — Section 115BBH (Finance Act 2022): flat 30% tax on Virtual Digital Assets (VDAs) + cess + surcharge. No deductions except cost of acquisition.
• Section 194S — 1% TDS on transfer of VDA (in force since 1 July 2022).
• Prevention of Money Laundering Act (PMLA), 2002 — extended to crypto via MoF Notification S.O. 1072(E) dated 7 March 2023. Crypto exchanges and wallet providers are now “reporting entities”.
• FEMA, 1999 — sending money abroad to buy crypto is regulated; outward remittance under LRS for crypto is restricted.
• No dedicated crypto law yet — until one is enacted, the existing tax + AML framework governs.
• RBI circular (2018) banning banks from servicing crypto firms was struck down by the Supreme Court in IAMAI v. RBI, 4 March 2020.

• Buy, hold, transfer crypto on FIU-registered Indian exchanges (CoinDCX, ZebPay, CoinSwitch, Mudrex, etc.).
• Use INR to fund the exchange via UPI, IMPS, or bank transfer.
• Withdraw INR to your bank account after KYC.
• Gift crypto — but the recipient is taxed at 30% if they sell.
• Stake or earn yield — taxable as income from VDA.
• Hold a self-custody wallet (MetaMask, Trust Wallet) — possession is legal.
• Pay tax by 31 July (individuals) or 31 October (audit cases).

• Pay for goods or services in crypto inside India.
• Accept salary in crypto from an Indian employer (must be paid in INR first).
• Use crypto to settle debt — creditors can refuse.
• Operate an exchange or wallet service without FIU-IND registration.
• Claim losses on crypto against salary, business income, or other crypto trades.
• Skip TDS — buyer/exchange must deduct 1%; failure attracts penalty under Section 271C.
• Use Binance / OKX / KuCoin — blocked in India and using them flags PMLA risk.
• Move INR abroad to buy crypto via foreign exchanges — FEMA contravention.

1. Pick an exchange listed on FIU-IND's registered entities page (fiuindia.gov.in).
2. Complete KYC (PAN, Aadhaar, video verification).
3. Add INR via UPI / IMPS / RTGS.
4. Buy crypto. The exchange auto-deducts 1% TDS.
5. Maintain a transaction log — date, asset, INR value, fee, TDS.
6. File ITR-2 or ITR-3 with Schedule VDA in your tax return.

1. Note the fair market value in INR on the date received.
2. That value is taxable as income from VDA at 30% (if sold) or other sources (if just received as gift > ₹50,000 from a non-relative).
3. Report it in Schedule VDA.

1. Banks may refuse based on internal risk policy — they cannot do so as RBI rule (RBI ban was struck down 2020).
2. Switch to a bank that supports crypto exchanges, or use UPI directly through the exchange.

• PAN — mandatory for any VDA transaction.
• Aadhaar — for exchange KYC.
• Bank statement — to prove source of INR.
• Exchange transaction history (CSV) — for ITR.
• Form 26AS / AIS — to verify TDS credit.
• Self-custody wallet records — keep transaction hashes for off-exchange transfers.

• Tax under-reporting: 50%–200% of tax due + interest (Section 270A).
• Failure to deduct TDS: 1% interest per month + Section 271C penalty.
• Non-disclosure of VDA in ITR: scrutiny notice + penalty under Section 271AAD.
• Operating an unregistered exchange / wallet service: prosecution under PMLA — up to 7 years jail + ₹5 lakh fine.
• Receiving funds from foreign exchanges: FEMA contravention — up to 3x the amount as fine.

There are no state-level crypto laws in India — crypto is regulated centrally by the Income Tax Department, FIU-IND (under MoF), and RBI.

1. Trading on Binance/foreign exchanges to “save 30% tax” — you cannot legally bring profits back to India through banking channels.
2. Hiding VDA in ITR — exchanges share data with the Income Tax Department under Section 285BA. Mismatch shows up in AIS.
3. Setting off crypto loss against equity / mutual fund profits — not allowed.
4. P2P trades to avoid TDS — buyer is still legally required to deduct 1%.
5. Treating an airdrop as “free” — taxable on receipt.
6. Sending crypto to a foreign wallet “for safekeeping” without reporting — could be flagged as illegal outward transfer.
7. Believing “crypto is anonymous” — every Indian exchange transaction is KYC-tied to your PAN.

No. Buying and holding is legal. Only payment with crypto is restricted.

No tax on holding. Tax triggers on sale, swap, gift, or income (staking/airdrop).

A 1% deduction at source on every crypto transfer (Section 194S). The exchange handles it.

Only against another crypto profit in the same financial year. No carry-forward.

No. e-Rupee is RBI's central bank digital currency (CBDC) — legal tender. Crypto is private and not legal tender.

Yes — most NFTs are VDAs under Section 115BBH.

No. Salary must be paid in INR. Conversion thereafter is your choice.

Yes, but mining rewards are taxable as VDA income.

Yes — gift between specified relatives is tax-free for the receiver, but capital gain on later sale is clubbed with the giver's income.

Pre-FY22 gains were taxable as capital gains or business income — old rules apply for those years.

Once on receipt of rewards (as income), once on sale (as VDA gain).

• Use only FIU-IND registered exchanges.
• Always pay through bank/UPI with traceable trail.
• Keep CSVs of all trades, deposits, withdrawals.
• File ITR with Schedule VDA, even if loss.
• Cross-check Form 26AS / AIS for TDS credits.
• Avoid foreign exchanges; never send INR abroad to buy crypto.
• Never accept crypto as payment for services in India.

• Income Tax Act, 1961 — Sections 115BBH, 194S, 271AAD, 285BA.
• PMLA, 2002 — MoF Notification S.O. 1072(E), 7 March 2023.
• IAMAI v. RBI — Writ Petition (Civil) 528/2018, decided 4 March 2020.
• Finance Act, 2022 — incometaxindia.gov.in.
• FIU-IND Registered Entities — fiuindia.gov.in.
• RBI Concept Note on Central Bank Digital Currency — October 2022.

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