Is Cryptocurrency Legal in India?
Cryptocurrency’s legal status in India has been a rollercoaster of regulatory changes and uncertainty. As of 2024, cryptocurrencies like Bitcoin and Ethereum are not illegal, but they remain unregulated by the Indian government. The Reserve Bank of India (RBI) and policymakers have adopted a cautious approach, balancing innovation with financial security concerns.
Key Regulations Governing Cryptocurrency in India
India’s crypto landscape is shaped by these pivotal rules:
- 30% Tax on Crypto Gains: All profits from cryptocurrency transactions face a flat 30% tax, with no deductions allowed.
- 1% TDS on Transactions: A 1% tax deducted at source applies to crypto trades exceeding ₹10,000 per transaction or ₹50,000 annually.
- Anti-Money Laundering (AML) Compliance: Exchanges must report suspicious transactions to the Financial Intelligence Unit.
- No Legal Tender Status: Cryptocurrencies cannot be used as payment for goods/services.
The Future of Cryptocurrency in India
Three factors will shape India’s crypto future:
- Digital Rupee Development: RBI’s CBDC pilot could influence private crypto regulations.
- Global Regulatory Trends: India may align with international frameworks like MiCA (EU’s Markets in Crypto-Assets regulation).
- Parliamentary Legislation: The pending Cryptocurrency and Regulation of Official Digital Currency Bill may establish clearer guidelines.
FAQ: Cryptocurrency Legality in India
1. Can I legally buy crypto in India?
Yes, through registered exchanges like CoinDCX or WazirX, but gains are taxable.
2. Will India ban cryptocurrencies?
Unlikely. The government prefers regulation over prohibition, focusing on RBI’s digital rupee as an alternative.
3. How to report crypto taxes?
Declare income under “Income from Other Sources” in ITR forms using Schedule VDA.
4. Are NFTs legal?
Yes, but they fall under the same tax rules as cryptocurrencies.
5. Can banks block crypto transactions?
While RBI’s 2018 ban was overturned, some banks still restrict crypto-related payments citing compliance risks.
