In this ever evolving world, cryptocurrency has been a significant topic in India. As the government is in the process of regulating crypto due to concerns surrounding illegal practices and volatility. And Bitcoin is the first cryptocurrency in this crypto world. It was invented in 2008 by Satoshi Nakamoto. Here in this content we will explore that cryptocurrency is legal in India or not.
Is Cryptocurrency Legal in India? Supreme Court Ruling in 2020
As of the Supreme court ruling in march 2020, cryptocurrency is legal in India. Because from the previous circular of 2018 supreme court has banned regulated entities from dealing in cryptocurrencies. And after the ruling of 2020 cryptocurrency revived in India. Also the government has expressed some concerns regarding cryptocurrency, money laundering, tax evasion and many more.
Who Regulates Cryptocurrency in India?
Well, we know what cryptocurrency is and that it is not directly regulated by the central government, financial institutes, or banks in India because cryptocurrency works on decentralized networks and blockchain where it can’t be controlled by any government authority.
In 2018, Reserve Rank of India announced that online currency transactions should be banned in India. So, now there is a department known as Digital Currency Board of India (DCBI) regulates cryptocurrency and controls them.
Government and Regulatory Stance on Cryptocurrency’s Legality in India
Basically cryptocurrencies are legal in India, no doubt, but they are not recognized as legal tender. And the government is considering all the regulatory measures to address the risks. Cryptocurrencies are based on the decentralized network for the security purpose but in India it was maintained by RBI (Reserve Bank of India), Ministry of Finance and SEBI (Securities and Exchange Board of India) due to concern about the financial stability and traders protection.
What About the Current Legal Status of Cryptocurrency in India as of 2025?
In India, as of 2025, cryptocurrencies like Ethereum, Bitcoin, Solana, and Doge are not illegal, but you can legally buy, sell, and hold them. They are not recognized as official money, you can not use them for daily basis or purchases of any goods or services.
The government charges 30% taxes on profits from crypto and also takes 1% TDS on transactions, but there are no clear laws about fully regulating or banning cryptocurrencies yet.
This means people can invest and trade, but they must follow rules and be careful, as the rules could change in the future. Since cryptocurrency is legal in India, various industries such as Real Estate, Network Marketing, and others have also started accepting cryptocurrency as a mode of payment.
The government and regulations, like the Reserve Bank of India and the Finance Ministry, are still deciding how to handle cryptocurrencies. There is a proposed law that could ban private cryptocurrencies, but it has not been passed, so the future is uncertain.
For now, the crypto market in India is active, but it exists in a grey area, with no official recognition from the government and some risks for investors due to the lack of clear rules and regulations.
List of Cryptocurrencies That are Legal in India
There are several cryptocurrencies legal in India which you can buy and sell trade on. There are no restriction to buy, sell, and trade crypto from India’s best crypto exchanges:
- Bitcoin (BTC)
- Ethereum (ETH)
- Pi Coin/Pi Network
- Binance Coin (BNB)
- Shiba Inu (SHIB)
- Dogecoin (DOGE)
- Cardano (ADA)
Is Cryptocurrency Legal for Individuals to Buy, Sell, and Hold in India?
Yes, in India, individuals can legally buy, sell, hold, and mine cryptocurrencies. While this is not recognized as legal tender, they have no existing law to ban their use for government or the finance ministry.
Still, government taxation on cryptocurrencies, with a 30% capital gain tax, also takes 1% of TDS (Tax Deducted at Source) deducted at 1% of the sale consideration.
Additionally, entities involved in cryptocurrency transactions, like VASP (Virtual Asset Service Providers) they must comply with the KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations.
How Does Indian Law Define a Virtual Digital Asset (VDA)? What Does it Mean for Crypto Users?
In India, Virtual Digital Asset (VDA) is the representation of any digital value such as cryptocurrencies (like Bitcoin and Ethereum), NFTs, and similar assets that is not Indian or foreign currency.
Any digital asset, like cryptocurrencies or NFTs, is called a Virtual Digital Asset, but it does not include government-issued digital money, just like the Indian Digital Rupee. That was added in the Indian tax law in 2022.
For the crypto users, thats means all the gains from VDAs are taxable at the rate of 30%, and with 1% of TDS transactions at above ₹50,000 per year, losses can not be set off against other income.
VDA is recognized as property and capital assets for tax purposes, but it can not be considered as a legal tender, and all users must comply with the strict reporting and anti-money laundering (AML) regulations.
Taxation of Cryptocurrency in India According to the Laws
Cryptocurrency taxation in India is quite specific. Forex trading companies like Exness can play a significant role in educating traders about crypto taxation. And here are some key points that you need to follow regarding the same:-
Type 1: Taxation on Cryptocurrency Transactions:
Profit from the sale of cryptocurrency are taxed at a rate of 30%
In addition to 30% tax, a 4% health and education tax is applicable on the tax amount.
Type 2: Tax Deducted at Source (TDS):
1% of TDS is applicable on the transfer of crypto assets.
What Does 1% TDS (Tax Deducted at Source) Mean on Crypto Transactions in India?
TDS is used when a crypto property is transferred from one wallet to another if it involves changes in ownership. Tax deductions were made at the Source (TDS) for virtual digital assets (VDA), such as Cryptocurrency and NFTS, introduced through a new section of the Financial Act, 2022, which changes the Income Tax Act, 1961.
According to the income tax department, the concept of TDS on VDA was introduced with a view to collecting taxes at the time of the transaction and ensuring better tracking and reporting of digital asset transactions from the central government. The most important objective of transactions is to detect details and monitor the flow of crypto.
Important Points About 1% TDS on Crypto in India
Starting from July 1, 2022, 1% TDS (tax deducted at the source), all crypto transactions. The buyer should cut 1% TDS and send it to the central government.
Where it is used, TDS requires:
- On Indian stock exchanges (they usually charge it automatically)
- P2P on platforms (buyers of buyers)
- If your total crypto trading in the financial year is under ₹50,000
- Under ₹10,000, TDS is not required
Key Regulatory Authorities Overseeing Cryptocurrency in India
There are several authorities in India that regulate cryptocurrencies and it is very important that cryptocurrency regulatory in India are evolving.
Authority 1: Reserve Bank of India (RBI)
Reserve Bank of India (RBI) is involved in cryptocurrencies discussions about its regulation, discussion about cryptocurrencies impact on financial system.
Authority 2: Ministry of Finance
The Ministry of Finance with its department including department of revenue and Central Board of Direct Taxation (CBDT) talk about cryptocurrency to policy making for crypto assets with taxation. And it announces the tax on crypto income from crypto transactions.
Authority 3: Security and Exchange Board of India (SEBI)
Security and Exchange Board of India plays a crucial role for cryptocurrency regulation where it regulates the use of cryptocurrency in the security market and security contracts.
How Does India’s Regulatory Approach to Cryptocurrencies Compare with Other Major Countries?
India takes a careful approach to cryptocurrency regulation. Crypto is not banned, but is not recognized as legal tender. There is no clear license system for crypto companies, and regulation is still developing. Traders must pay 30% tax on profits and 1% TDS on transactions.
The purpose of a proposed bill is to regulate space, but it is not yet a law. The upper side is divided between multiple authorities like the RBI and SEBI, which creates confusion and makes the rules unclear.
On the other hand, countries such as the United States, the EU, and Japan have more developed and clear crypto rules. The US investor focuses on protection, the EU has introduced an integrated law called MiCA, and Japan has proper licensing rules for exchanges.
Because the rules in India are not fully clear or supportive, it may fall behind attracting crypto innovation and investments, unlike these other countries that promote development in the region.
Frequently Asked Questions
Q1. Is crypto safe in India?
Ans-Yes, It is safe in India because it is regulated by RBI, SEBI and Ministry of finance.
Q2. Can I invest in crypto in India?
Ans-Yes, you can but you have to be aware about the consequences of cryptocurrencies.
Q3. How are cryptocurrencies taxed in India?
Ans-Cryptocurrencies in India are subject to specific tax regulations. Here are the key points:
- Capital Gains Tax
- Tax Deducted at Source (TDS)
- No Deductions
- Reporting
- No Set-off or Carry Forward
- Gift Tax
Q4. What is the 1% TDS on cryptocurrency transactions?
Ans-1% of TDS is applicable on the transfer of crypto assets. You have to pay that tax.
Q5. Can I use cryptocurrencies for payments in India?
Ans-No you can use cryptocurrencies for payments in India.
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