Cryptocurrency has become one of the hottest financial topics in India. With millions of people investing in Bitcoin, Ethereum, and other digital assets, the question everyone asks is: “Is crypto legal in India?”
The answer is yes, cryptocurrency is legal in India—but with regulations. The Indian government does not recognize crypto as legal tender (like rupees), but it does not ban buying, selling, or holding crypto. Instead, it has introduced taxation and compliance rules to monitor the market.
This article provides a complete 2025 guide on the legal status of cryptocurrency in India, covering its history, taxation rules, government policies, RBI stance, and the future outlook for investors.
Table of Contents
The History of Cryptocurrency in India
To understand the current legal framework, let’s go step by step through how crypto has evolved in India.
2013 – Early Warnings from RBI
- The Reserve Bank of India (RBI) issued its first caution about the risks of Bitcoin and other virtual currencies.
- It warned investors about volatility, fraud, and lack of consumer protection.
2017 – Crypto Boom in India
- Global crypto prices surged, and Indian investors started joining exchanges like ZebPay, WazirX, and CoinDCX.
- The RBI and Finance Ministry again warned citizens but did not impose an outright ban.
2018 – RBI Banking Ban
- The RBI issued a circular prohibiting banks from providing services to crypto businesses.
- This move forced many exchanges to shut down or move operations abroad.
2020 – Supreme Court Verdict
- In March 2020, the Supreme Court of India lifted the RBI ban, calling it unconstitutional.
- This ruling revived the Indian crypto industry, leading to a surge in trading and new startups.
2021 – Government Considers Crypto Bill
- The Indian government proposed the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.”
- It aimed to ban “private cryptocurrencies” while promoting a Central Bank Digital Currency (CBDC).
- The bill never passed, but it created confusion among investors.
2022 – Crypto Taxation Introduced
- In Budget 2022, the government introduced:
- 30% tax on crypto profits
- 1% TDS (Tax Deducted at Source) on all transactions
- This confirmed that crypto was not illegal, but heavily regulated.
2023 – RBI Pushes for CBDC
- The RBI launched pilot programs for the Digital Rupee (e₹).
- It continued to express concerns about private cryptocurrencies but accepted that citizens were investing.
2024–2025 – Current Status
- As of 2025, crypto remains legal in India, but not a legal tender.
- Tax rules remain strict, and discussions continue about a comprehensive regulatory framework.
Is Crypto Legal in India in 2025?
Yes. As of 2025:
- Owning, buying, and selling crypto is legal.
- Crypto is not recognized as currency.
- Profits are taxed at 30%.
- 1% TDS applies on all transactions.
- GST may apply to services provided by exchanges.
This means: you can invest and trade, but you cannot use Bitcoin or Ethereum to pay for goods and services legally in India.
The Taxation Rules for Crypto in India
The government of India treats crypto as a Virtual Digital Asset (VDA). Here’s what every investor must know:
1. 30% Tax on Profits
- Any income from the transfer of crypto assets is taxed at 30%.
- No deductions are allowed, except for the cost of acquisition.
Example:
- If you bought Bitcoin for ₹1,00,000 and sold it for ₹2,00,000, your profit is ₹1,00,000.
- You will pay ₹30,000 as tax.
2. 1% TDS on Every Transaction
- When you sell crypto, 1% TDS is deducted.
- This applies even if you sell at a loss.
Example:
- You sell Ethereum worth ₹50,000.
- The exchange deducts ₹500 (1%) and deposits it with the government.
3. Gifts and Airdrops Taxable
- If you receive crypto as a gift, it is taxable.
- Airdrops are also considered income.
4. No Set-Off of Losses
- Losses from crypto cannot be adjusted against income from other sources.
- For example, if you lose money in Bitcoin, you cannot set it off against stock market gains.
RBI’s Stance on Cryptocurrency
The Reserve Bank of India (RBI) has always been cautious about crypto.
- It believes cryptocurrencies pose risks to financial stability.
- It supports a CBDC (Digital Rupee) as a safer alternative.
- It continues to discourage banks from promoting crypto but cannot ban it after the Supreme Court verdict.
In short: RBI doesn’t like crypto, but it cannot stop people from investing.
Government Regulations and Crypto Bill
The Indian government has not yet passed a dedicated Crypto Bill, but discussions are ongoing.
The expected regulations may include:
- Licensing requirements for exchanges.
- Strict KYC (Know Your Customer) rules.
- Prevention of money laundering.
- Tax reporting requirements.
Until a law is passed, taxation rules remain the main regulation.
The Digital Rupee (CBDC) and Its Impact
India has launched its Central Bank Digital Currency (CBDC), known as the Digital Rupee (e₹).
- Issued by the RBI.
- Backed by the Indian government.
- Works like physical money but in digital form.
The CBDC is not a cryptocurrency. It is centralized and controlled by the RBI.
Impact on crypto:
- The government may push citizens towards CBDC.
- Private crypto may face tighter regulations.
- But investors still prefer Bitcoin and Ethereum as assets.
Risks of Investing in Crypto in India
While crypto is legal, it comes with risks:
- High Volatility – Prices can rise or crash overnight.
- Tax Burden – 30% tax + 1% TDS reduces profits.
- Regulatory Uncertainty – Future laws may impose stricter rules.
- Scams & Frauds – Fake exchanges and Ponzi schemes target new investors.
- Bank Restrictions – Some banks still hesitate to deal with crypto-related payments.
Benefits of Legal Crypto in India
Despite challenges, legalization has benefits:
- Investor Protection – Taxes and regulations confirm that crypto is not banned.
- Growing Adoption – More Indians are investing in Bitcoin, Ethereum, and stablecoins.
- Startups and Innovation – Dozens of Indian blockchain startups are attracting global funding.
- Global Opportunities – Indian traders can access international markets.
Future of Crypto in India
Looking ahead, the Indian crypto market is expected to grow.
- More Regulations: A clear crypto bill may be passed by 2026.
- Institutional Adoption: Big companies may add crypto to balance sheets.
- Integration with CBDC: Exchanges may integrate the Digital Rupee.
- Web3 & Metaverse Growth: India could become a hub for blockchain innovation.
However, the government will likely balance innovation with regulation to prevent risks.
FAQs
1. Is crypto completely legal in India?
Yes, buying, selling, and holding crypto is legal. But it is not legal tender.
2. Can I use Bitcoin to buy things in India?
No. You cannot use crypto as currency. Payments must be made in Indian Rupees.
3. Do I need to pay tax on crypto in India?
Yes, 30% tax on profits and 1% TDS on transactions.
4. Is there any ban on exchanges like WazirX or CoinDCX?
No, exchanges are legal, but they must follow KYC and tax rules.
5. What is the future of crypto in India?
The future looks positive, but expect stricter regulations and possible integration with the Digital Rupee.
Conclusion
So, is crypto in India legal?
The answer is a clear YES—but with regulations.
- Crypto is not banned.
- You can invest and trade safely.
- Taxes apply (30% profits + 1% TDS).
- RBI promotes the Digital Rupee but cannot stop private crypto.
The future of crypto in India depends on how the government balances innovation with regulation. For now, investors can participate freely—but must stay aware of taxation, risks, and scams.