30% Tax. No Loss Offset.
No Regulation.
Still Interested?

Yes — buying, selling, and holding crypto is legal. But it's not regulated like stocks (SEBI) or bank deposits (RBI). No business is required to accept crypto as payment. The government taxes it heavily (30% flat + 1% TDS) and RBI remains openly skeptical. Legal ≠ encouraged. Think of it as: "allowed, but deliberately made painful."

Flat 30% tax on ALL gains — no slab benefit, no indexation, no reduced rate for long-term. Plus 4% cess, making effective rate ~31.2%. On top: 1% TDS on every transaction above ₹50,000/year (Section 194S). Deductions: ONLY cost of acquisition — no transaction fees, no internet costs, nothing else. The tax regime is designed to discourage, not just tax.

No. Crypto losses CANNOT be set off against any other income — not salary, not capital gains from stocks, not even gains from other crypto assets. Losses also CANNOT be carried forward to future years. If you lose ₹5 lakh on Bitcoin and gain ₹5 lakh on Ethereum in the same year, you pay 30% tax on the ₹5L Ethereum gain AND absorb the ₹5L Bitcoin loss with zero offset. This is the harshest tax treatment of any asset class in India.

Report crypto in "Schedule VDA" (Virtual Digital Assets) in ITR-2 or ITR-3. ITR-2 if you treat crypto as capital gains (most investors). ITR-3 if you treat it as business income. Critical: reconcile your Schedule VDA figures with Form 26AS (which shows 1% TDS deducted by exchanges). Many taxpayers lose TDS credit because these don't match. Use exchange-provided tax reports (CoinDCX, WazirX, Koinly) to generate accurate figures.

On July 18, 2024, hackers stole $234.9 million (~₹2,000 crore) from WazirX — linked to North Korea's Lazarus Group. That was 45% of WazirX's total reserves. After a Singapore court restructuring in October 2025, users got back ~85% of their pre-hack balances. The remaining 15% was converted to non-tradeable "Recovery Tokens" with uncertain value. No Indian regulator compensated users — because crypto exchanges have no investor protection fund.

No. 1% TDS is just tax deducted in advance — like salary TDS. Your actual tax is 30% on gains. The 1% TDS is deducted on the FULL sale amount (not just profit). You claim it as credit when filing ITR. Example: sell crypto worth ₹10 lakh (bought at ₹8 lakh). TDS: ₹10,000 (1% of ₹10L). Actual tax: ₹60,000 (30% of ₹2L gain). Balance payable: ₹50,000.

The honest answer: for most Indians, no. After 30% tax + 4% cess + no loss offset + 1% TDS liquidity drag + exchange counterparty risk (WazirX hack) + zero regulatory protection — the risk-adjusted, post-tax return is terrible compared to Nifty 50 (12.5% LTCG after ₹1.25L exemption) or even FDs. If you still want exposure, limit to 1-3% of portfolio, use only money you can afford to lose entirely, and use a reputable exchange registered with FIU.

Exchanges must be registered with the Financial Intelligence Unit (FIU-IND) under PMLA rules. As of 2026, registered exchanges include CoinDCX, WazirX, ZebPay, and Mudrex. Foreign exchanges like Binance were banned for operating without FIU registration. FIU registration covers anti-money laundering compliance only — it does NOT mean your funds are insured or protected. There is no equivalent of SEBI's investor protection fund for crypto.