Is Bitcoin legal in India? What you need to know before buying or selling it

Bitcoin crossed the $100,000 mark over the period of time following crypto supporter Donald Trump's win in US presidential elections

Published on: Dec 5, 2024, 12:21:30 IST

By HT News Desk | Edited by Abhyjith K. Ashokan

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Bitcoin is now all over the headlines having crossed the $100,000 mark over the period of time following crypto supporter Donald Trump's win in US presidential elections. The rally came from Trump promising to support such types of digital assets and turn the US into a "crypto capital," with a favourable environment and clear regulations. The rally has also sparked discussions on how to trade cryptocurrencies in India and whether they are legal or not.

Representation of the bitcoin cryptocurrency and a price chart are seen in this illustration taken October 24, 2023 (Dado Ruvic/Reuters)

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Is Bitcoin legal in India?

Bitcoin as well as all other cryptocurrencies are legal in India with the Supreme Court ruling in favour of cryptocurrencies, lifting a ban imposed by the Reserve Bank of India (RBI) prior.

Also Read: Timeline to $100,000 and beyond: Bitcoin's wild ride

However, there are strict taxation laws, which includes a 30% tax on gains from Virtual Digital Assets (VDAs) and a 1% Tax Deducted at Source (TDS) on every transaction above ₹50,000 (or ₹10,000 for specified categories).

The TDS is applicable to the total sale amount whether profits are made or not and has to be filed in the Income Tax Return (ITR) to get refunds.

It is also not possible to offset losses from one type of VDA to another. For example, losses from trading in Ethereum can't be used to offset gains from trading in Bitcoin.

How to invest in Bitcoin in India?

It is possible to invest in Bitcoin by choosing a certified crypto exchange, registering yourself with your Know Your Customer (KYC) details, depositing funds using supported methods like bank transfers, and then making trades and keeping the assets in secure crypto wallets.

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For selling cryptocurrencies, it is important to ensure the TDS deduction is accounted for, and the proceeds are transferred to your bank account, fully complying with tax regulations.

However, it is important to keep in mind that crypto trading is highly risky owing to the volatile nature of prices. On top of that, they are also susceptible to hacks and scams. More importantly, they are also very prone to regulatory changes.

Regulatory risks of cryptocurrencies in India

For example, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 aims to regulate the industry by banning private cryptocurrencies while at the same time, setting up the stage for the RBI's central bank digital currency (CBDC).

However, this has been delayed. The proposed restrictions on private digital currencies are to mitigate risks like money laundering and fraud.

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HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

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