Crypto Restrictions in India: What’s Banned, What’s Still Legal

When you hear crypto restrictions in India, government rules that limit how citizens buy, sell, or move digital assets. Also known as cryptocurrency regulations in India, these rules don’t ban crypto outright—they just make it harder to use without jumping through legal hoops. The Reserve Bank of India never made crypto illegal, but banks were told to avoid dealing with crypto businesses. That sent traders to peer-to-peer platforms like Binance P2P, where millions now trade Bitcoin and USDT using UPI, cash deposits, and even WhatsApp groups.

Today, the biggest hurdle isn’t legality—it’s VDA tax, a 30% tax on crypto gains with no loss offset allowed. If you buy Bitcoin at $30,000 and sell at $50,000, you owe 30% on the $20,000 profit—even if you lost money on other trades. Plus, there’s a 1% TDS on every trade, taken automatically by exchanges. This isn’t just about revenue—it’s a way to track every transaction. The government doesn’t want you to avoid taxes; it wants to know exactly how much you’re making.

Then there’s FEMA crypto rules, foreign exchange laws that control how money leaves India. Moving crypto overseas isn’t illegal, but you need to prove the money came from legal sources. If you transfer $10,000 worth of Ethereum to a foreign wallet, you might need to show tax receipts, bank statements, or proof of income. Many Indians use offshore exchanges like Kraken or Bybit—but only after filing their crypto income under the Income Tax Act. Skip this step, and you risk penalties, account freezes, or worse.

What’s surprising? Crypto hasn’t died in India—it’s gone underground. People still trade. They still earn staking rewards. They still buy NFTs. But now they do it through private Telegram channels, local cash traders, and non-KYC wallets. Some even use crypto to pay freelancers in the US or buy goods from Turkey, bypassing traditional banking limits. It’s not perfect, but it works. And unlike Nigeria’s ban, where crypto use exploded after the crackdown, India’s restrictions have forced users to become more careful, not more reckless.

That’s why the posts below matter. They don’t just list rules—they show you how real people are working around them. You’ll find guides on legally moving crypto abroad, warnings about fake exchanges pretending to be compliant, and breakdowns of how tax rules actually play out in practice. No theory. No fluff. Just what’s happening on the ground, from traders who’ve been through it all.