7 India crypto myths, checked
By BtcMedia Research · Checked
These come up again and again in Telegram groups and comment threads. Each one is checked against a court ruling, the tax department or official records, with the source linked.
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Myth 1
“Crypto is banned in India.”
False
No law bans owning or trading crypto. The Supreme Court struck down the RBI's 2018 banking restriction in March 2020, Parliament has taxed crypto since 2022, and exchanges are regulated under anti-money-laundering law. A 2021 bill to restrict private cryptocurrencies was never passed.
Source: Supreme Court: IAMAI v. RBI (4 March 2020) · PIB: FIU-IND action against offshore exchanges (Dec 2023)
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Myth 2
“Crypto is legal tender in India.”
False
Crypto is legal to hold but it is not money issued or backed by the state, so no one has to accept it as payment. India's official digital currency is the RBI's e-rupee, which is a separate thing.
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Myth 3
“You only pay tax when you withdraw rupees to your bank.”
False
Tax arises on every transfer of a virtual digital asset: selling for rupees, swapping one coin for another, or spending it. Each transfer goes into Schedule VDA, whether or not the money reaches your bank.
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Myth 4
“Losses on one coin reduce the tax on another.”
False
Each gain is taxed at a flat 30% plus cess. A loss on one virtual digital asset cannot be set off against a gain on another, or against any other income, and it cannot be carried forward.
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Myth 5
“You can deduct exchange fees and other costs.”
False
Only the cost of buying the asset can be deducted from the sale value. Trading fees, internet bills and other expenses are not deductible.
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Myth 6
“The 1% TDS is an extra tax on top of the 30%.”
False
TDS is tax collected in advance. It shows in your annual tax statement and is set against your final tax when you file; any excess is refunded. It does lock up trading cash until then.
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Myth 7
“Trading on a foreign exchange keeps you out of Indian tax.”
False
Residents of India are taxed on their worldwide income, so gains on any exchange are taxable at 30% and reportable. Offshore exchanges that do not register with FIU-IND can also be blocked in India.
Source: PIB: FIU-IND action against offshore exchanges (Dec 2023)
Education only, not legal or tax advice. Spotted something out of date? Tell us.