Is Bitcoin Legal in India?
Yes. There is no law in India that prohibits individuals from buying, selling, or holding Bitcoin.
In 2025, the legal landscape for Bitcoin in India is taxed and regulated, but not legal tender.
While it is legal to buy, sell, and hold Bitcoin, Indian government treats it as a Virtual Digital Asset (VDA) rather than a currency.
The following article breaks down the current legal status, taxation, and regulatory framework for Bitcoin in India.
- In 2018, the Reserve Bank of India (RBI) issued a circular banning banks from supporting crypto-related transactions.
- In 2020, the Supreme Court of India overturned the RBI’s ban, ruling it “disproportionate.” This restored the right of Indian citizens to trade and invest in cryptocurrencies.
Bitcoin is not legal tender. This means you cannot legally demand that a shopkeeper or service provider accept Bitcoin as payment for a debt or product.
Under the Finance Act, government classifies Bitcoin and other cryptocurrencies as Virtual Digital Assets (VDAs).
This classification allows government to regulate them under Income Tax Act without granting them the status of “money.”
India has one of the strictest crypto tax regimes in the world.
As of 2025, the following rules apply:
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30% Flat Tax: Any profit made from the transfer of Bitcoin is taxed at a flat rate of 30% (plus a 4% cess).
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No Loss Offsetting: If you make a profit on Bitcoin but a loss on Ethereum, you cannot “offset” the loss. You must pay 30% on the profit. Losses cannot be carried forward to future years.
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1% TDS: A 1% Tax Deducted at Source (TDS) is levied on every sell transaction. This is designed to create a “paper trail” for the government to track every crypto trade.
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GST on Services: While Bitcoin itself isn’t subject to GST, the trading fees charged by Indian exchanges include an 18% GST.
The Indian government requires all crypto exchanges (domestic and international) to register with Financial Intelligence Unit (FIU-IND).
- Exchanges must verify the identity of users through KYC (Know Your Customer).
- Major international players like Binance and KuCoin have recently complied with these rules to operate legally within the country.
There is ongoing discussion regarding the COINS Act of 2025, a proposed legislative framework intended to provide even more clarity. If passed, this act is expected to:
- Formally define crypto asset classes (e.g., utility tokens vs. security tokens).
- Introduce stronger consumer protection laws against fraud.
- Establish a dedicated regulator, potentially under the oversight of SEBI or the RBI.
Revise all sections here,
You are free to invest in Bitcoin in India, prepared for high taxation and strict reporting requirements. Always ensure you use FIU-registered exchanges to stay compliant with local laws.