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India

Regulation by tax and AML: crypto is legal, heavily taxed and FIU-registered, but India still has no licensing law.

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30%Flat tax on VDA gains, with no loss set-off
1%Tax deducted at source on each VDA transfer
54VDA service providers registered with FIU-IND

India's relationship with crypto began with hostility.

After years of warnings, the Reserve Bank of India (RBI) barred banks from serving crypto businesses in April 2018.

Indian exchanges lost their fiat rails overnight.

In March 2020 the Supreme Court struck the circular down in IAMAI v RBI, and a domestic exchange industry grew quickly on the back of the reopened banking access.

Read the full story

The government then chose to regulate through tax instead of a crypto law.

The Finance Act 2022 created the category of virtual digital assets (VDAs) and taxed gains at a flat 30% with no loss offsets.

It also imposed a 1% tax deducted at source (TDS) on every transfer, which drove a large share of trading to offshore platforms.

In March 2023 the Finance Ministry brought VDA service providers under the Prevention of Money Laundering Act, requiring them to register with the Financial Intelligence Unit (FIU-IND).

FIU-IND has since become the de facto gatekeeper.

It sent show-cause notices to nine offshore exchanges, including Binance and KuCoin, in December 2023, notices to 25 more in October 2025 and to another 15 in September 2026, alongside app and URL takedowns.

By March 2026, 54 VDA service providers had registered, though FIU-IND does not publish the list.

The tax regime has been carried into the new Income-tax Act, 2025, in force from 1 April 2026, with crypto-asset reporting aligned to the OECD's CARF and penalties for non-filing.

For builders, India is a huge retail market with no licensing regime, no investor protection law and a tax design that punishes high-frequency trading.

RBI remains skeptical of private crypto and promotes its own e-rupee, piloted since late 2022.

A long-promised government discussion paper on crypto has still not been published, and Parliament's Standing Committee on Finance has yet to report on its study of VDAs.

Until policy changes, FIU-IND registration and tax compliance are the whole rulebook.

Who regulates

  • FIU-INDFinancial Intelligence Unit India

    In charge of

    India's financial intelligence agency under the Ministry of Finance. It receives and analyses suspicious transaction reports under the Prevention of Money-laundering Act, 2002, shares intelligence and enforces reporting duties.

    On crypto

    Registers VDA service providers as PMLA reporting entities since March 2023 (54 by March 2026) and sets their AML rulebook, updated January 2026. It had ordered app and URL takedowns for 53 non-compliant platforms by March 2026, starting with Binance and KuCoin in 2023, and served 15 more in September 2026.

    FIU-IND website
  • RBIReserve Bank of India

    In charge of

    India's central bank under the Reserve Bank of India Act, 1934. It sets monetary policy, issues the rupee, regulates banks and non-bank lenders, and oversees payment systems.

    On crypto

    Cut crypto off from banks in April 2018, a ban the Supreme Court struck down in March 2020; banks may now serve crypto clients with normal due diligence. It remains sceptical of private crypto and has piloted the e-rupee CBDC since late 2022.

    RBI website
  • CBDTCentral Board of Direct Taxes

    In charge of

    The statutory board under the Ministry of Finance that sets policy for and administers India's direct taxes, including income tax, through the Income Tax Department.

    On crypto

    Administers the 30% flat tax on VDA gains with no loss set-off and the 1% TDS on transfers, both from 2022 and now in the Income-tax Act, 2025. It also runs crypto-asset reporting under section 509 and Form 167, aligned with the OECD's CARF, with penalties of ₹200 a day for unfiled statements from April 2026.

    CBDT website
  • DEADepartment of Economic Affairs, Ministry of Finance

    In charge of

    The Finance Ministry department that leads India's economic and financial sector policy, including the Union budget, capital markets and international financial cooperation.

    On crypto

    Leads crypto policy for the government but has not proposed a licensing law. The discussion paper on crypto it has long promised has still not been published.

    DEA website

What to watch

  • Publication of the government's long-delayed discussion paper on crypto policy, and the Standing Committee on Finance's report on virtual digital assets
  • Further FIU-IND action and app takedowns against unregistered offshore VDA service providers
  • The first Form 167 crypto-asset statements, covering calendar 2026 and due by 31 May 2027, and India's CARF data exchanges
  • Expansion of RBI's e-rupee pilots, including programmable and offline use cases

Quick answers

Who regulates crypto in India?

Four authorities shape crypto rules in India. FIU-IND (Financial Intelligence Unit India): registers VDA service providers as PMLA reporting entities and enforces AML/CFT rules. RBI (Reserve Bank of India): central bank; skeptical of private crypto and issuer of the e-rupee CBDC. CBDT (Central Board of Direct Taxes): administers the 30% VDA tax, 1% TDS and crypto-asset reporting. DEA (Department of Economic Affairs, Ministry of Finance): leads crypto policy, including the pending discussion paper.

Do crypto exchanges need a licence in India?

Yes, though the regime is narrow or still phasing in. VDA platforms must register with FIU-IND for AML, but there is no licensing, capital or custody regime. The licence is FIU-IND Reporting Entity registration for VDA service providers from FIU-IND, held by 54 as of 9 Mar 2026. Four Pillars rates exchange licensing in India as partial (reviewed 5 Oct 2026).

Are stablecoins regulated in India?

Only in narrow cases. No issuance framework; stablecoins are taxed as VDAs while RBI promotes the e-rupee instead. Four Pillars rates its stablecoin regime in India as restricted (reviewed 5 Oct 2026).

How is crypto taxed in India?

Flat, no loss set-off, plus 1% TDS on each transfer. Four Pillars rates tax clarity in India as comprehensive (reviewed 5 Oct 2026).

Can real-world assets be tokenised in India?

Only in narrow cases. No onshore framework for tokenized securities; VDAs sit outside securities law. Four Pillars rates tokenisation and real-world assets in India as restricted (reviewed 5 Oct 2026).

What changed most recently in India's crypto rules?

9 Sep 2026: FIU-IND issues notices and takedown orders to 15 VDA platforms. Platforms including WhiteBIT, Pionex and XT.com were targeted, with app and URL blocking requested. 1 Apr 2026: Income-tax Act, 2025 takes effect. The new Act carried over VDA taxation and added penalties for failing to file crypto-asset transaction statements.

What should companies watch next in India?

Publication of the government's long-delayed discussion paper on crypto policy, and the Standing Committee on Finance's report on virtual digital assets. Further FIU-IND action and app takedowns against unregistered offshore VDA service providers. The first Form 167 crypto-asset statements, covering calendar 2026 and due by 31 May 2027, and India's CARF data exchanges.

Timeline

  1. FIU-IND issues notices and takedown orders to 15 VDA platforms

    Platforms including WhiteBIT, Pionex and XT.com were targeted, with app and URL blocking requested.

  2. Income-tax Act, 2025 takes effect

    The new Act carried over VDA taxation and added penalties for failing to file crypto-asset transaction statements.

  3. Notices to 25 more offshore platforms

    FIU-IND said 50 VDA service providers had registered and pursued 25 that had not.

  4. FIU-IND targets nine offshore exchanges

    Show-cause notices went to Binance, KuCoin, Huobi, Kraken and five others for operating unregistered.

  5. VDA service providers brought under the PMLA

    Notification S.O. 1072(E) made crypto exchange, transfer and custody businesses AML reporting entities.

  6. Retail e-rupee pilot launches

    RBI began its first retail CBDC pilot in four cities, a month after the wholesale pilot.

  7. 1% TDS on VDA transfers begins

    Section 194S required tax deduction at source on every VDA transfer above small thresholds.

  8. 30% tax on virtual digital assets takes effect

    The Finance Act 2022 taxed VDA gains at a flat 30% with no deductions or loss set-off.

  9. RBI tells banks the ban is dead

    RBI told banks to stop citing the 2018 circular but to keep applying customer due diligence.

  10. Supreme Court strikes down the RBI ban

    In IAMAI v RBI the Court set aside the 2018 circular as disproportionate.

  11. RBI cuts crypto off from the banking system

    RBI told regulated entities not to deal in or provide services for virtual currencies.

Cite this page: Four Pillars Asia Digital Asset Policy Center, “India crypto regulation”, reviewed 5 Oct 2026, https://policy.4pillars.io/india. Free to reuse with attribution; also as markdown and JSON.

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