December 12, 2021

Bitcoin – the world’s most popular and the first decentralized cryptocurrency has gradually made a global impact. Its noteworthy network effect and high-end security layer have propelled its growth in the thriving crypto market in India. Today, it is more accessible than ever before with more and more exchanges coming up every day. And unarguably, it boasts to have one of the largest developer ecosystems than any other altcoin.

Even though Bitcoin seems to be a promising technology for the future, there is a lot to understand regarding its legal status in India. Definitely, your mind will be lingering with a lot of questions. So, let’s uncover the answers to important ones.

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Table of Contents

Question 1: Is it legal to buy bitcoin in India?

Presently, Bitcoin’s legal status is not clearly defined in India as it is neither officially banned nor recognized as a legal currency. You can easily hold, sell, and buy Bitcoin in India for investment purposes, but there is no legislature to look into its functioning. This simply means that buying bitcoin is not illegal but there is no governing framework to safeguard your investment, unlike the other asset class owners enjoy.

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For instance, for stocks or banking-related issues, you can approach the RBI Ombudsman to address your grievances. While the same is not possible in the crypto segment. Hence, it is legal but unregulated.

Question 2: Is dealing with bitcoin subject to taxation in India?

The Indian Income Tax Act, 1961 does not cover cryptocurrencies, therefore, no specific rules have been ascertained regarding its taxation. Furthermore, Bitcoin has not yet been accepted as a legal tender by RBI as it is a relatively new thing for the Indian market. But that doesn’t mean you can escape paying taxes on your bitcoin profits.

As per the standard income tax laws, all incomes generated irrespective of their source are taxable, including your profits from bitcoin. Thus, capital gains made from bitcoin either by selling or holding it for investment are liable to be taxed as your business income.

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Question 3: How to buy and invest in Bitcoin in India?

The growing number of crypto exchanges in India has made buying, selling, and investing in Bitcoins much easier and simpler. Dealing with Bitcoin as well as other crypto-assets is far more efficient via these exchange platforms.

To begin investing, firstly, you need to open a trading account with the exchange. For this, you will be required to –

Sign up on the exchange platform > Furnish your personal details > Verify your email address and mobile number.

Once done, you will have to wait for verification and approval after which you can transfer funds to your account to purchase bitcoin. However, your registration will be done instantly and this process just takes 5 -10 minutes.

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Question 4: Is it possible to cash out bitcoin in India?

Liquidity is one of the prominent reasons why people are influenced to buy bitcoin. Bitcoin can be easily converted to cash. Whether you have an emergency or maybe you want to exit investment due to bearish market conditions, you can seamlessly cash out bitcoins by selling them. Many of the popular exchanges in India provide instant INR exchange and withdrawals for your cryptos.

It is worth noting that to cash out your cryptocurrency, you’ll need a KYC verified account. Hence, make sure you complete these requisites beforehand.

Question 5: Which is the best bitcoin wallet in India?

The various bitcoin wallets available at your disposal include:

  • l Desktop wallets.

  • l Mobile wallets.

  • l Paper wallets.

  • l Hardware wallets.

  • l Exchange wallets.

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These wallets are similar to your online bank accounts that are responsible for storing your bitcoins safely. Nevertheless, keep in mind that features such as security level, accessibility, and ease of use may differ from wallet to wallet.


As of now, the Indian crypto market has around 15 million active investors, much higher than the UK which accounts for 2.3 million investors. This indicates a progressive increase in interest in cryptocurrency investments in India. Thus, it can be interpreted that even the absence of regulations is not preventing Indian investors from exploring the digital asset class.

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