South Asia / Verified 2026-07-14
Is crypto legal in India?
No crypto-specific law
Buying, holding, and trading cryptocurrency is legal in India — the Supreme Court struck down the RBI's 2018 banking-ban circular in March 2020 (Internet and Mobile Association of India v. RBI) — but no dedicated law classifies or licenses crypto as a currency, security, or commodity; it exists in a regulatory space defined mainly by punitive taxation and anti-money-laundering rules rather than a standalone Crypto Act.
Tax treatment
'Virtual Digital Asset' (VDA) — a standalone statutory tax category, not treated as currency or as an ordinary capital asset; the definition was expanded from 1 April 2025 to explicitly include 'crypto-assets.'
Flat 30% tax on all gains from transferring virtual digital assets (VDAs), plus applicable surcharge and 4% health-and-education cess, under Section 115BBH of the Income Tax Act 1961 (carried forward in substance under the recodified Income Tax Act 2025, effective 1 April 2026). Losses from VDA transfers cannot be offset against any other income, or even against gains from other crypto assets, and no expenses beyond the cost of acquisition are deductible.
VDA transfers must be declared under 'Schedule VDA' in ITR-2 (capital-gains treatment) or ITR-3 (business-income treatment) for AY 2026-27. A separate 1% TDS under Section 194S is withheld at source on transfers exceeding Rs 50,000/year (Rs 10,000 for 'specified persons'); missing PAN pushes the TDS rate to 20%.
Can banks handle crypto here?
Banks may service exchanges registered with FIU-IND under enhanced due diligence, and crypto trading itself is not illegal — but the RBI has never endorsed this. Per Reuters reporting on internal RBI documents from May-June 2026, the central bank is actively recommending that banks and payment systems be walled off from crypto assets and privately issued stablecoins, and has kept outright prohibition on the table as a live policy option pending the Finance Ministry's 2026-27 review.
Buying and selling crypto in India
Any exchange serving Indian users (domestic or foreign) must register with FIU-IND as a reporting entity under PMLA — mandatory since a 4 July 2024 notification, with AML/CFT guidelines updated 8 January 2026 and 31+ VASPs registered. There is still no SEBI or RBI licensing regime for exchanges; a proposed multi-regulator split (SEBI over security-like tokens, RBI over cross-border flows, Finance Ministry over tax policy) remains under discussion ahead of the Union Budget 2026-27.
Worth knowing
The Income Tax Act 2025 (effective 1 April 2026) recodified and renumbered the 1961 Act, including its VDA provisions, but preserved the 30% flat tax, no-loss-offset rule, and 1% TDS in substance — most 2026 professional guidance still refers to the legacy 'Section 115BBH' label. Treat RBI's anti-crypto banking posture as an active, evolving lobbying position rather than settled law.
Authority sources used
Outbound links are included for verification and entity authority, not decoration. Every claim on this page traces back to one of these.
- Section 115BBH — Tax on income from transfer of virtual digital assetsIncome Tax Department, Government of India
- Reserve Bank of India (RBI) still favors crypto prohibition amid tax evasion fearsCoinDesk (Reuters)
- Supreme Court's judgment on virtual currencies (IAMAI v. RBI)AZB & Partners
- The requirement of FIU-IND registration and its ramifications for the Virtual Digital Asset industryLegal500
FAQ
Is cryptocurrency legal in India in 2026?
Yes, owning and trading it is legal — the Supreme Court blocked RBI's 2018 banking ban in 2020 — but there is still no dedicated cryptocurrency law; regulation happens indirectly through tax and anti-money-laundering rules.
Can I offset crypto losses against gains in India?
No. Section 115BBH blocks any loss set-off, including against gains from other virtual digital assets — every VDA transfer is taxed in isolation at a flat 30%.