Bitcoin and other crypto-assets are neither banned nor recognised as legal tender in India. They sit in a regulated-by-tax and anti-money-laundering framework, and the risk of scams and tax notices is high.
Legal status
In 2018 the RBI barred regulated entities from dealing with crypto businesses. In Internet and Mobile Association of India v. Reserve Bank of India (2020), the Supreme Court set that circular aside as disproportionate. Parliament has not enacted a comprehensive crypto statute, and crypto remains lawful to hold and trade, but unregulated in a consumer-protection sense.
Tax
Since 2022, income from transfer of a virtual digital asset (VDA) is taxed at a flat 30% with no deduction other than the cost of acquisition, no set-off of losses, and 1% TDS on transfers above prescribed thresholds. The Income-tax Act, 2025, in force from 1 April 2026, carries this regime forward, and the 2026 Budget retained the rates and tightened reporting penalties. Exchange service fees also attract GST.
AML regulation
Since March 2023, virtual digital asset service providers are reporting entities under the PMLA, requiring registration with FIU-IND, KYC and suspicious transaction reporting. The Enforcement Directorate has attached large sums linked to crypto-related crime.
Common scams
- Ponzi-style schemes promising fixed returns, such as the GainBitcoin case investigated by the CBI.
- Fake trading apps and "pig-butchering" romance-investment frauds.
- Exchange failures and hacks, such as the reported 2024 WazirX security breach.
- Pump-and-dump token promotions.
If you lose money
- Report on cybercrime.gov.in and call 1930; give wallet addresses and transaction hashes.
- Inform the exchange immediately so it can freeze related accounts.
- File an FIR for cheating and IT Act offences, and consider civil recovery or a complaint under consumer or insolvency law where applicable.
- Report accurately to the tax department; hiding losses or gains creates additional exposure.
Businesses accepting crypto, and individuals receiving it as payment or gift, should obtain tax and compliance advice before transacting.
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This article is for general information only and is not legal advice. Law and procedure change; please verify the current position for your specific case. Last reviewed: November 2026.