How to Buy Crypto in India: Legal, but Heavily Taxed

Crypto is legal to buy and hold in India, but it is taxed more heavily than in almost any tier-1 market and the exchange landscape has been turbulent. This dispatch explains the rules, the tax regime, which exchanges are registered, and the friction around payments. It is dated general information, checked 2026-09-10, and it is not financial, tax or legal advice.

India is the clearest example of why 'is crypto legal here' and 'is crypto easy here' are different questions. It is legal, and India has one of the world's largest crypto user bases — but the tax regime is punishing, banking access has been patchy, and at least one major domestic exchange has suffered a catastrophic hack. So the useful framing for an Indian user is not whether you can, but how to do it while staying on the right side of the tax rules and out of the way of the biggest risks.

Is crypto legal in India?

Yes — owning and trading crypto is legal in India, and has been since the Supreme Court struck down a banking ban in 2020. India has not passed a law banning crypto; instead it has chosen to regulate it through taxation and anti-money-laundering registration. What it lacks, as of the check-date, is a comprehensive dedicated crypto law, so the framework is built from tax rules and financial-intelligence-unit requirements rather than a single act. That can change, so verify the current position with Indian authorities.

The 30% tax and the 1% TDS

India's defining feature is its tax regime for virtual digital assets, introduced in the 2022 Finance Act. Gains are taxed at a flat 30% regardless of income bracket, with no deduction for expenses other than the cost of acquisition, and — crucially — losses cannot be offset against gains or carried forward. On top of that, a 1% tax is deducted at source (TDS) on transactions above a threshold, which affects liquidity and active trading in particular. This is a heavier, more mechanical regime than the capital-gains systems of the UK, US, Canada or Australia, and it is why our tax pointer flags India as a special case.

The practical consequence of the no-loss-offset rule is that active trading is punishing in India in a way it is not elsewhere. In most countries a losing trade can offset a winning one, so you are taxed on your net gain; in India each gain is taxed at 30% while losses simply vanish, and the 1% TDS nibbles at every transaction's liquidity on top. That structure quietly favours buying and holding over frequent trading, and it makes disciplined record-keeping essential — you cannot lean on losses to soften a bad year. This is a description of the regime, not advice on how to trade, and you should confirm the current rules and thresholds with a qualified Indian tax professional.

FIU-registered exchanges

Exchanges serving Indian users must register with India's Financial Intelligence Unit (FIU-India) for anti-money-laundering. In 2023-24 the government blocked a number of offshore exchanges that had not registered, and some — Binance among them — subsequently registered with FIU-India (in Binance's case after paying a penalty) to return. Domestic FIU-registered platforms include CoinDCX, CoinSwitch and others. Because registration status and availability have moved so much, confirm an exchange is currently FIU-registered before using it — we are not placing affiliate links for the Indian market, precisely because the compliant landscape is still settling.

This is a deliberate independence choice, not an oversight. In several tier-1 markets we are comfortable pointing to a registered exchange with an affiliate link because the compliance picture is stable and we can stand behind it. India's is not settled enough for us to do that responsibly: registrations have been granted, withdrawn and contested within short windows, and a link that is compliant today could point at a venue that is blocked next quarter. So for India we stick to naming the categories and telling you to verify current FIU registration yourself. If that costs us a commission, that is the point — it keeps the guidance honest.

Payment friction and real risks

Funding an Indian crypto account can be awkward. Banks have at times been cautious about processing crypto-related payments, and access to instant rails like UPI for crypto has fluctuated depending on banking-sector willingness, so deposit methods vary by exchange and change over time. There are also hard lessons on the risk side: the 2024 hack of the Indian exchange WazirX, which drained a large amount of customer assets, is a reminder that 'not your keys, not your coins' applies with force, and that even a well-known local exchange can fail. Prefer registered platforms, withdraw to self-custody what you are not actively trading, and only commit money you can afford to lose.

A cautious checklist for Indian users

Given the tax weight and the platform risk, a little discipline goes a long way in India. None of the following is financial advice — it is a way to stay compliant and reduce avoidable risk:

• Use an exchange currently registered with FIU-India, and re-check its status, since registrations have changed.
• Budget for the tax up front: a flat 30% on gains, with no loss offset, plus 1% TDS on transactions.
• Keep meticulous records — the flat-tax, no-offset regime makes clean transaction history essential.
• Withdraw longer-term holdings to your own self-custody wallet rather than leaving them on an exchange.
• Treat any platform promising guaranteed returns or 'tax-free' trading as a scam signal.

The overarching point is that India rewards caution: the rules are strict, the tax is heavy, and the risks are real, but crypto is legal and usable if you stay inside the registered, well-documented lane. For anything material, consult a qualified Indian tax professional — this is a pointer, not tax or financial advice.

For how India compares with the regulated tier-1 markets, see the best crypto exchange by country map and is crypto legal around the world.