The most common way to buy crypto in India is to deposit INR via UPI or IMPS into an FIU-registered exchange such as CoinDCX, ZebPay, or Mudrex and buy BTC or USDT on the spot market. The fact every buyer must know is that gains are taxed at a flat 30% plus 4% cess (31.2% effective) with no loss offset, and each sale also draws 1% TDS on the gross value.
Legal status
Legal but hostile. Crypto is taxed (30% + 4% cess) and the RBI backs "prohibition-leaning" policy; banks may restrict crypto accounts at their discretion.
Exchanges you can use
| Exchange | Type | License | Notes |
|---|---|---|---|
| Mudrex | regional | FIU-registered | 60% futures / 40% spot affiliate |
| CoinDCX | regional | FIU-registered | 50% affiliate, UPI withdrawal |
| ZebPay | regional | FIU-registered | UPI support |
| Binance | major | FIU-registered (no INR deposits) | P2P INR |
KYC requirements
PAN + selfie (liveness) + one ID (Aadhaar, passport, DL, or voter ID) + penny-drop bank check
FIU-IND guidelines updated 8 Jan 2026: also records geo-coordinates + IP.
Payment rails
- UPI — 0.77% (Onramp.money) · instant; some banks block crypto UPI
- IMPS / NEFT — 0.77% (Onramp.money) · bank transfer
Stablecoins — which one works here
- USDT: Available via P2P (trades at premium)
- USDC: Limited — no compliant retail off-ramp
RBI hostile to private stablecoins; India is a blocked stablecoin corridor.
Tax
30% + 4% cess = 31.2% effective, plus 1% TDS on every sale
No loss offset; Section 115BBH. Off-shore exchange use risks FEMA penalty up to 3×.
Bank account risk
Banks freeze accounts with large/frequent crypto transfers at their discretion; P2P attracts the most scrutiny. Use FIU-registered exchanges only, keep records.
How to cash out
- CoinDCX — exchange spread + 1% TDS · UPI/bank withdrawal
- P2P (Binance/Bybit) — 1–5% spread · bank scrutiny risk
Security
Avoid WazirX (2024 $235M hack). Beware "guaranteed returns" schemes; declare crypto in ITR to avoid TDS/penalty issues.
How to buy — step by step
- Choose an FIU-registered exchange (Mudrex, CoinDCX, or ZebPay).
- Complete KYC (PAN + Aadhaar + selfie liveness).
- Deposit INR via UPI/IMPS (bank may block — use a crypto-friendly bank).
- Buy USDT/BTC on the spot market.
- Withdraw to a wallet; keep records for the 30% tax + 1% TDS.
Records to keep
- PAN-linked trade records (date, asset, INR value)
- TDS certificates (Form 16A)
- ITR disclosure (Section 115BBH)
FAQ
Is crypto legal in India?
It is not banned, but heavily taxed (31.2%) and the RBI favours prohibition. Use FIU-registered exchanges.
What KYC do I need in India?
PAN, a selfie with liveness, one ID document, and a penny-drop bank verification — per FIU-IND 2026 rules.
How is crypto taxed in India?
30% flat + 4% cess on gains, plus 1% TDS on every sale, with no loss offset.
Which stablecoin works in India?
USDT via P2P (at a premium); there is no compliant retail USDC off-ramp. RBI is hostile to stablecoins.
Is the 1% TDS on crypto an extra tax I just lose?
No — the 1% TDS under Section 194S is deducted on the gross sale consideration (not your profit) and works as advance tax: it is credited against your final liability in the ITR, and any excess is refundable once the entry appears in your Form 26AS/AIS. It still hits cash flow because it is deducted even on a loss-making sale, and you must claim the credit via Schedule VDA in ITR-2 or ITR-3.
Can I move my crypto off an Indian exchange into my own wallet?
Yes, but crypto withdrawals require completed KYC plus Enhanced Due Diligence, and FIU-registered platforms such as CoinDCX may ask self-custody users for proof of wallet ownership (for example a wallet screenshot) under Travel Rule compliance. Note that CoinDCX’s Web3 product does not allow withdrawals to external wallets at all, so off-ramping to self-custody is not universal across Indian exchanges.
Can I use the LRS to buy crypto on a foreign exchange?
No — the RBI’s Liberalised Remittance Scheme lets a resident remit up to USD 250,000 per financial year (April–March) for permitted purposes, but acquiring foreign crypto/VDAs is not a permitted purpose, so authorised-dealer banks will not process a remittance to an offshore exchange. Doing it through informal channels risks FEMA penalties and makes it hard to bring proceeds back through banking channels.
Sources: https://www.fiuindia.gov.in/ (FIU-IND) + RBI · Last reviewed 2026-09-14