Shopping Guides & How-To Tips

How to Buy Cryptocurrency in India: Step-by-Step Guide

Rajasekhar Reddy
Rajasekhar Reddy
Dec 02, 2025
 

Buying cryptocurrency in India is straightforward, but doing it safely and legally takes a little structure. You’ll be sharing identity documents (KYC), moving money through regulated rails, and dealing with a tax setup that’s very specific to Virtual Digital Assets (VDAs).

This guide walks you through the whole process: where to buy, how to pay, how to store, what fees to expect, and what Indian tax and compliance rules you must know.

Note: This is general information, not financial advice. Crypto is risky and prices can move fast.

1) First, know the rules that matter in India

Crypto isn’t “legal tender” in India

The RBI has repeatedly warned that it has not authorized any entity to deal in virtual currencies and that users deal at their own risk.

Taxes apply (even if regulation is still evolving)

  • 30% tax on income from transfer of VDAs under Section 115BBH

  • 1% TDS on consideration for transfer of VDAs under Section 194S

AML compliance is real (and expanding)

FIU-IND has issued AML/CFT guidelines for VDA service providers and is positioned as the AML/CFT regulator for VDASPs, with updated guidance as of 8 January 2026 listed in FIU-IND downloads.

2) Checklist before you buy (do this once)

Choose a platform that’s serious about compliance

You’ll see many “best exchange” lists, but your real filter should be:

  • KYC and transparent fee structure

  • Clear INR deposit/withdraw options

  • Strong security features (2FA, device management)

  • Signs of AML compliance (FIU-IND reporting alignment)

FIU-IND has detailed circulars and guidance for registration and AML/CFT reporting for VDASPs.
And India has been actively pushing exchanges (including offshore ones) toward compliance under PMLA-linked expectations.

Set your “risk guardrails”

Before you press Buy, decide:

  • How much you’re okay losing (seriously)

  • Whether you’re holding long-term or trading

  • If you want simpler exposure (BTC/ETH) or are exploring altcoins (higher risk)

Keep documents ready for KYC

Most regulated platforms ask for:

  • PAN

  • Aadhaar/ID verification

  • Bank account details

  • Selfie / face verification

3) Step-by-step: How to buy cryptocurrency in India

Step 1: Create an account on a crypto exchange/app

  • Use your real name and details (mismatch causes failed KYC and withdrawal issues)

  • Use a strong password + password manager

Step 2: Complete KYC (don’t skip this)

KYC unlocks:

  • higher deposit/withdraw limits

  • better fraud protection

  • faster support for disputes

Step 3: Add security before adding money

Do these immediately:

  • Turn on 2FA (authenticator app preferred)

  • Set an anti-phishing code (if available)

  • Lock withdrawals to whitelisted addresses (advanced but powerful)

Step 4: Add INR funds

Most Indian platforms offer:

  • UPI

  • Netbanking / IMPS

  • Bank transfer

Tip: Start with a small test deposit first, then do your full amount.

Step 5: Pick what you’re buying (keep it simple first)

If you’re new, many people start with:

  • Bitcoin (BTC)

  • Ethereum (ETH)

Why? Higher liquidity, more transparency, fewer “surprise” token risks than ultra-small coins.

Step 6: Place a buy order

You’ll usually see two options:

  • Market order: buys instantly at current price (simple, but can slip in volatile moments)

  • Limit order: you set a price and buy only if the market hits it (better control)

For beginners: market order is fine for small amounts. For bigger buys: limit orders help.

Step 7: Understand the fee line items

Typical costs include:

  • Trading fee (buy/sell)

  • Spread (difference between buy and sell price)

  • Deposit/withdrawal charges (varies)

  • Network fee for transferring to a wallet

Always check the final payable before confirming.

4) Where should you store your crypto?

Option A: Keep it on the exchange (easy, but riskier)

Best for:

  • small holdings

  • casual users

  • short-term buying/selling

Risk:

  • exchange downtime

  • account lockouts

  • platform risk (rare, but not zero)

Option B: Move it to a self-custody wallet (more control)

Best for:

  • long-term holders

  • larger amounts

Types:

  • Software wallets (mobile/desktop): convenient

  • Hardware wallets: strongest for long-term storage

Rule of thumb: If it would hurt to lose it, don’t keep it all on an exchange.

5) The tax part (don’t ignore this)

30% tax on gains (Section 115BBH)

The Income Tax portal and FAQs clearly state VDA gains are taxed at 30%, plus applicable surcharge and cess.

1% TDS (Section 194S)

The Income Tax Department’s tutorial notes 1% TDS applies on consideration for transfer of VDAs under Section 194S.

Reporting in ITR

The Income Tax portal mentions disclosure through Schedule VDA (for relevant ITR forms).

Practical tip: Download your transaction statement regularly. Do not wait until year-end.

6) Common mistakes Indian buyers make (and how to avoid them)

Mistake 1: Buying through random Telegram/WhatsApp “deal” sellers

That’s where most scams live. If someone offers “USDT cheaper” or “guaranteed returns,” run.

Mistake 2: Ignoring TDS and thinking small trades don’t matter

Even frequent small trades can create a messy compliance trail. The system is designed to capture transactions through TDS.

Mistake 3: Using P2P without understanding counterparty risk

P2P can work, but it’s where bank account freezes and disputes happen. If you’re new, start with direct INR on-ramps.

Mistake 4: Leaving security for later

Most account takeovers happen because people:

  • reuse passwords

  • skip 2FA

  • click fake “support” links

7) Cost-effective buying tips (without taking dumb risks)

  • Avoid overtrading: fees + TDS friction can eat you alive

  • If you’re buying long-term, consider smaller periodic buys instead of one emotional big buy

  • Compare two platforms for:

    • buy price (spread)

    • withdrawal fees

    • INR deposit convenience

CTA: Planning a trip purchase or subscription with crypto gains? Track profit and taxes first, then spend. Don’t surprise yourself at filing time.

FAQs

1) Is buying crypto legal in India?

India taxes VDAs and has compliance requirements, while the RBI warns users it hasn’t authorized virtual currencies and users act at their own risk.

2) What’s the tax on crypto profit in India?

Gains from transfer of VDAs are taxed at 30% under Section 115BBH, plus applicable surcharge and cess.

3) What is 1% TDS on crypto transactions?

Section 194S requires 1% TDS on consideration paid for transfer of VDAs (rules and mechanics depend on transaction type).

4) Should I keep crypto on an exchange or move to a wallet?

For small holdings, exchange storage can be okay. For larger or long-term holdings, a personal wallet (especially hardware) reduces platform risk.

5) How do I avoid crypto scams in India?

Avoid “guaranteed return” groups, don’t share OTP/2FA, verify URLs, and never send crypto to “unlock” withdrawals. Always treat unknown DMs as scams.