How to Stay Legal While Trading Crypto in India
28 October 2025

Crypto Tax Calculator for India

Calculate Your Tax Liability

Based on India's 30% profit tax and 1% TDS rules (as per Income Tax Bill 2025)

Tax Breakdown

INR
Profit Amount
30% Profit Tax
1% TDS (Transaction Tax)
Total Tax Due
Note: TDS is automatically deducted at source by registered exchanges. This calculator shows estimated tax for filing.
Compliance Tip

Always use FIU-IND registered exchanges like CoinDCX, WazirX, or Binance India for tax compliance. Unregistered platforms increase your risk of penalties.

India doesn’t ban cryptocurrency. But if you think you can avoid rules by using offshore exchanges or hiding transactions, you’re setting yourself up for trouble. The government isn’t trying to stop crypto-it’s trying to track it. And if you don’t play by their rules, you’ll face penalties, frozen accounts, or even tax raids.

What’s Actually Allowed in India?

Cryptocurrencies like Bitcoin, Ethereum, and NFTs are legal to hold and trade in India. The Supreme Court overturned the RBI’s 2018 banking ban back in 2020, and since then, the government has built a system around taxation and reporting-not prohibition.

As of 2025, the Income Tax (No. 2) Bill, 2025 is the law. It defines all crypto assets as Virtual Digital Assets (VDAs). That means every trade, swap, or sale is taxable. There’s no gray area: if you made money on crypto, the government knows about it-or will find out.

The Real Rule: Pay Taxes or Get Caught

The biggest hurdle isn’t access-it’s compliance. India has one of the strictest crypto tax systems in the world:

  • 30% tax on all profits from crypto sales or swaps (no deductions, no losses offset)
  • 1% TDS (Tax Deducted at Source) on every transaction over ₹10,000, whether you’re buying, selling, or swapping crypto

That 1% TDS isn’t optional. It’s automatically taken by every registered exchange. If you use an unregistered platform, you’re bypassing the system-and that’s where problems start.

Here’s how it works in practice: You buy 0.1 BTC for ₹500,000 on CoinDCX. Later, you sell it for ₹600,000. You owe 30% tax on the ₹100,000 profit = ₹30,000. CoinDCX already withheld ₹6,000 (1% of ₹600,000) as TDS. You still owe ₹24,000 more when you file your return. If you don’t report this, the IT Department will match your bank deposits with exchange records and come after you.

Use Only FIU-IND Registered Exchanges

The Financial Intelligence Unit India (FIU-IND) is the agency that tracks crypto money flows. Every exchange that operates legally in India must register with them. As of October 2025, over 50 platforms are registered-including Binance, Coinbase, WazirX, CoinDCX, and Zebpay.

Why does this matter? Because these exchanges:

  • Collect your KYC documents (ID, address, PAN)
  • Report all transactions to FIU-IND
  • Automatically deduct 1% TDS
  • Provide tax reports you can use for filing

Using an unregistered exchange like BingX or LBank (both shut down by regulators in 2024) means you’re trading anonymously. That sounds tempting-but it’s a red flag for tax authorities. If your bank account suddenly shows large deposits from an unknown source, they’ll investigate. And they will find the link.

A child uses a magnifying glass over a crypto spreadsheet as tax birds drop forms into a filing box.

Keep Every Single Transaction Record

You don’t need to be an accountant, but you do need to track everything:

  • Date and time of every buy, sell, swap, or transfer
  • Amount in INR and crypto
  • Exchange used
  • Transaction ID
  • Purpose (e.g., “bought ETH for DeFi yield”)

Use a simple spreadsheet or free tools like Koinly or CoinTracker (both work in India). Don’t rely on exchange statements alone-they might not include off-chain transfers or wallet-to-wallet trades.

Indian tax law requires you to keep records for six years. If you’re audited and can’t produce them, the tax department can assume all your crypto activity is taxable income-and tax you on the highest possible value.

Don’t Try to Hide Crypto Income

Some people think they can avoid taxes by:

  • Using peer-to-peer (P2P) platforms without KYC
  • Transferring crypto to foreign wallets
  • Claiming crypto as “gifts” or “family transfers”

None of these work.

FIU-IND monitors P2P platforms. If you’re buying crypto from someone with no ID, the system flags it. Foreign wallets don’t hide your activity-Indian banks report outbound transfers over ₹7 lakh per year. And the government has agreements with 100+ countries to share financial data under the Crypto-Asset Reporting Framework (CARF), which India adopted in 2024.

One trader from Bengaluru tried to gift ₹20 lakh worth of ETH to his brother in 2024. The brother sold it. The IT Department traced the original purchase, linked it back to the trader’s account, and issued a tax notice for ₹6 lakh in unpaid tax plus penalties.

Kids play a board game called 'Crypto Compliance Quest' with smiling crypto creatures and a tax owl watching.

What Happens If You Get Caught?

The penalties aren’t warnings-they’re financial blows:

  • Underreporting income: 100% to 300% penalty on tax due
  • Failure to file: ₹10,000 fine, plus interest at 1% per month
  • Non-compliance with TDS: Exchange freezes your account until you file
  • Repeated violations: Possible investigation under the Prevention of Money Laundering Act (PMLA)

There are no jail sentences for crypto trading alone-but if the government suspects money laundering, they can seize your assets. That’s happened to over 200 individuals since 2023.

How to Stay Safe: A Simple Checklist

You don’t need to avoid crypto in India. You just need to be smart:

  1. Use only FIU-IND registered exchanges (WazirX, CoinDCX, Zebpay, Binance India, Coinbase India)
  2. Complete full KYC-no shortcuts
  3. Track every transaction, even small swaps
  4. Calculate your tax quarterly (don’t wait until March)
  5. File your ITR with Schedule VDA (Virtual Digital Assets)
  6. Keep records for 6+ years
  7. Consult a crypto-savvy CA if you trade frequently or use DeFi

There’s no magic trick. No VPN, no offshore wallet, no anonymous exchange will save you if you’re not reporting. The system is designed to catch you.

What’s Next for Crypto in India?

The government isn’t moving toward a ban. They’re moving toward a regulated market. SEBI is pushing for a licensing framework for crypto exchanges, and the RBI is testing a digital rupee that could integrate with crypto platforms. The goal? To bring crypto into the formal financial system-not shut it down.

That means compliance isn’t a temporary hassle. It’s the new normal. The traders who win in India aren’t the ones who hide. They’re the ones who document, report, and pay on time.

If you’re serious about crypto in India, treat it like any other investment. Track it. Report it. Pay your taxes. The rest? That’s not avoidance. That’s just smart.

Can I use Binance in India legally?

Yes, but only through Binance India, the locally registered entity that complies with FIU-IND rules. The global Binance platform is blocked in India. You must use the Indian version with full KYC and TDS enabled. Using the global site risks account freezes and tax notices.

Is crypto mining legal in India?

Yes, mining is legal. But any crypto you mine is treated as income and taxed at 30%. You must report the fair market value in INR on the day you receive it. Electricity costs aren’t deductible. Many miners use this income to pay taxes on other crypto trades.

Do I pay tax if I lose money on crypto?

No, you can’t offset crypto losses against other income. But you also don’t pay tax on losses. However, if you sell one crypto at a loss and buy another, you still pay 1% TDS on the purchase. Losses can’t be carried forward. This makes crypto trading more expensive than stocks or mutual funds.

Can I use DeFi platforms like Uniswap in India?

Technically yes, but it’s risky. DeFi swaps don’t deduct TDS, so you’re fully responsible for tracking and reporting. The IT Department can see your wallet addresses through blockchain analysis tools. If you don’t report these trades, you’re at high risk of penalties. Use DeFi only if you’re prepared to keep detailed records.

What if I only hold crypto and never sell?

You don’t owe tax until you sell, swap, or spend it. Holding crypto without any transaction is not taxable. But you still need to declare your holdings in your ITR under Schedule VDA. Failure to disclose holdings-even if no gain-can trigger scrutiny.

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