Supreme Court Crypto Ruling in India: What It Means for Traders Today
India Crypto Tax Calculator
Calculate Your India Crypto Tax Liability
⢠30% tax on all crypto profits
⢠1% TDS (Tax Deducted at Source) on every trade above âš50,000
⢠FIFO method required for tax calculations
Your Transactions
No transactions added yet
Tax Calculation Results
How to File Your Taxes
- 1 Report all crypto income under "Income from Other Sources" in your ITR
- 2 Use FIFO method (first-in, first-out) to calculate gains
- 3 Maintain detailed records of all transactions with screenshots, transaction IDs, and exchange statements
- 4 Verify your 1% TDS is reflected in Form 26AS
- 5 Consider hiring a crypto-specialized CA for complex cases
On March 4, 2020, the Supreme Court of India did something no one expected: it overturned the Reserve Bank of Indiaâs ban on cryptocurrency. That ruling didnât legalize crypto like a law would - but it removed the biggest roadblock holding back millions of Indians who wanted to trade, hold, or use digital assets. Today, in 2025, that decision still shapes everything from how you buy Bitcoin to how much tax you pay on your gains.
What the Supreme Court Actually Did
The RBI had issued a circular in April 2018 telling banks and payment providers: Donât deal with crypto at all. That meant if you ran a crypto exchange like WazirX or CoinDCX, you couldnât open a bank account. You couldnât let users deposit rupees. You couldnât cash out profits. It wasnât a law banning crypto - it was a financial chokehold. The Supreme Court called it disproportionate and unconstitutional. The court didnât say crypto is legal tender. It didnât say itâs safe. It just said the RBI couldnât shut down an entire industry without evidence that it was causing systemic harm. The ruling was based on the principle that if something isnât illegal, the government canât ban it just because itâs new or risky. Thatâs a big deal in a country where regulators often act first and think later.What Changed After the Ruling
Right after the decision, crypto platforms saw a surge. WazirX reported a 400% jump in new users within three months. CoinDCX added over a million users in under a year. By 2025, India has an estimated 15 to 20 million crypto users - among the highest in the world. Banks finally started reopening accounts. Payment gateways like Razorpay and PayU began integrating with crypto exchanges. People could buy Bitcoin with UPI, pay for services with Ethereum, and even get loans against their crypto holdings. The ecosystem grew fast - not because the government supported it, but because the court removed the fear of being cut off from the banking system.But Hereâs the Catch: Taxes Are Brutal
Just because you can trade crypto doesnât mean itâs easy or cheap. In 2022, the government slapped on two taxes that make India one of the most expensive places in the world to trade digital assets:- 30% tax on all profits - no matter how long you held the asset. Even if you bought Bitcoin for $10,000 and sold it for $11,000, you pay âš30,000 in tax on âš10,000 profit.
- 1% TDS (Tax Deducted at Source) - every time you trade, even if youâre breaking even. If you swap Bitcoin for Ethereum, the exchange withholds 1% of the trade value as tax upfront.
What the Government Still Wonât Do
Hereâs the biggest problem: the Supreme Court told the government to make rules. Three years later, it still hasnât. The proposed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 wanted to ban private crypto and launch a government-backed digital rupee. But that bill never passed. In October 2025, the Supreme Court publicly called out the government for turning a âblind eye.â Justice Surya Kant even said unregulated Bitcoin trading is ânothing but a more polished form of Hawalaâ - a reference to informal money transfer networks. Thatâs the paradox: the court protects your right to trade, but the government refuses to give you clear rules. No guidelines on NFTs. No clarity on DeFi. No rules for cross-border transfers. If you use a wallet like MetaMask to interact with a smart contract, youâre in legal gray territory. Youâre on your own.How People Are Dealing With It
Most casual users just buy Bitcoin or Ethereum, hold it for a few years, and cash out - hoping they can prove their cost basis to the tax department. They keep records manually, use Excel sheets, or pay for tax software like Koinly or CoinTracker. Serious traders? They hire chartered accountants who specialize in crypto. They file ITR-3 forms and track every single trade - even small swaps. Some even use offshore exchanges to avoid the 1% TDS, though that comes with its own legal risks. Startups arenât staying. Many Indian crypto founders have moved to Dubai, Singapore, or Portugal, where the rules are clearer and the taxes lower. India still has the users - but itâs losing the builders.
Whatâs Next?
The Supreme Court isnât done. In October 2025, it heard a bail petition from a man accused of crypto fraud in Gujarat. The court didnât just rule on bail - it used the hearing to warn the government again: âYou canât ignore the reality of global finance.â The writing is on the wall. Regulation is coming. But will it be smart? Or will it be punitive? If the government creates a balanced framework - licensing exchanges, protecting consumers, enforcing AML rules, and lowering the tax burden - India could become a crypto hub. But if they keep treating crypto like a criminal enterprise, theyâll just push innovation offshore.What You Need to Do Right Now
If youâre trading crypto in India, hereâs what you must do:- Track every transaction - buys, sells, swaps, staking rewards. Even small ones.
- Calculate your gains - use the FIFO method (first in, first out) for tax purposes. The tax department expects it.
- Pay the 30% tax - report all crypto income under âIncome from Other Sourcesâ in your ITR.
- Keep proof of purchase - screenshots, transaction IDs, exchange statements. Youâll need them if the IT department asks.
- Donât ignore TDS - if you traded on an Indian exchange, the 1% was already taken. But make sure itâs reflected in your Form 26AS.
Final Thought
The Supreme Court gave Indiaâs crypto community a lifeline. But the government hasnât handed them a map. Right now, youâre allowed to swim - but youâre not told where the shore is, or if there are sharks nearby. Stay informed. Stay cautious. And donât wait for the government to protect you. In Indiaâs crypto world, the only rule that matters is this: know your risks, keep your records, and pay your taxes.Is cryptocurrency legal in India after the Supreme Court ruling?
Yes, cryptocurrency is legal to hold and trade in India. The Supreme Court struck down the RBIâs 2018 ban on banks serving crypto businesses. That means you can buy, sell, and hold Bitcoin, Ethereum, and other digital assets without breaking the law. But thereâs no formal legal framework - so youâre operating in a gray zone with heavy taxes and no consumer protections.
Do I have to pay tax on crypto profits in India?
Yes. India taxes all crypto profits at a flat 30%, regardless of how long you held the asset. You also pay 1% TDS (Tax Deducted at Source) on every trade above âš50,000 (or âš10,000 in a single day). Losses cannot be offset against other income. Even swapping one crypto for another triggers a taxable event.
Can I use Indian banks to trade crypto?
Yes. After the Supreme Courtâs 2020 ruling, banks are allowed to serve crypto exchanges. Most major Indian exchanges like CoinDCX, ZebPay, and Bitbns now have working bank accounts. You can deposit rupees via UPI, NEFT, or IMPS. However, some banks still hesitate - so if your account gets frozen, itâs often due to internal policy, not law.
Are NFTs and DeFi regulated in India?
No. There are no official rules for NFTs, DeFi protocols, or crypto lending platforms. The Supreme Court has acknowledged these are part of the evolving digital economy, but the government has not issued any guidance. That means youâre on your own legally. Any income from NFT sales or DeFi yields is still subject to the 30% tax, but how to report it isnât clear.
Why hasnât the government passed a crypto law yet?
The government has been divided. Some officials want to ban crypto to protect the rupee and prevent money laundering. Others recognize its potential for innovation and financial inclusion. The proposed 2021 bill aimed to ban private crypto and launch a digital rupee, but it stalled in Parliament. With no political consensus and pressure from the Supreme Court, the issue remains in limbo.
Should I invest in crypto in India right now?
It depends on your risk tolerance. The legal right to trade exists, and the market is growing. But the tax burden is among the highest globally, and regulatory uncertainty is high. If youâre comfortable with volatility, understand the tax rules, and are willing to keep detailed records, crypto can be part of a diversified portfolio. But donât expect legal protection or refunds if something goes wrong.
Louise Watson
November 7, 2025 AT 15:27So the court said yes, but the government says maybe. And we pay 30% just to exist in this gray zone.
andrew seeby
November 9, 2025 AT 07:30bro i bought btc in 2021 and still holding... taxes are wild but at least i can trade đ
Allison Doumith
November 10, 2025 AT 17:09They removed the ban because they had no legal basis to enforce it not because they believe in crypto. The government still sees it as a threat to control and theyâre not wrong to be scared. But fear doesnât make policy it makes panic
Emily Unter King
November 11, 2025 AT 06:57From a compliance standpoint the 1% TDS is actually a net positive. It automates reporting and reduces audit risk. The real issue is the lack of guidance on DeFi and NFTs. Without clear classification these are treated as speculative instruments when theyâre infrastructure. Thatâs a regulatory failure not a market failure.
John Doe
November 12, 2025 AT 04:50Theyâre not ignoring crypto theyâre waiting for the next crash. When everyone loses money theyâll say âtold you soâ and ban it anyway. This is all a trap. The 30% tax is designed to drain retail. Banks are still spying on your transactions. They want you to think youâre free while theyâre counting every satoshi.
Benjamin Jackson
November 13, 2025 AT 23:04Iâve been trading since 2019 and Iâve seen this dance before. The court gave us breathing room. Now itâs up to us to build something better than what we had. Not everyone needs to be a trader. Some of us just want to hold and learn. Thatâs okay too.
Tara R
November 14, 2025 AT 20:56Letâs be honest no one in India actually pays the 30% tax. They just pretend they did. The entire system is a farce built on performative regulation. The government doesnât want crypto to succeed they just donât want to look like theyâre losing control.
Rob Ashton
November 16, 2025 AT 17:51For those considering participation in this space: I strongly recommend engaging with a qualified tax professional who has direct experience with digital asset reporting under Indian law. The consequences of noncompliance are severe and irreversible. Documentation is not optional-it is the foundation of your legal and financial integrity in this unregulated environment.
Finn McGinty
November 17, 2025 AT 22:01Let me tell you something about the Indian government. They donât hate crypto. They hate being out of control. The Supreme Court gave the people power. The government canât arrest every trader. So they tax them into submission. They donât want to ban it-they want to bleed it dry. And guess what? Itâs working. People are quitting. The ones who stay? Theyâre either rich or crazy. And honestly? Iâm both.
Michelle Sedita
November 19, 2025 AT 07:28I think the real question isnât whether crypto is legal-itâs whether weâre ready to be a society that trusts individuals with their own money. The court said yes. The government says no. But the people? Weâre already living in the future theyâre afraid of.
Ryan Inouye
November 20, 2025 AT 03:44India is the only country that taxes you for swapping Bitcoin for Ethereum. In America you can do that tax free. In Germany you hold for a year and itâs gone. Here? You pay 30% and 1% just to move your own money. This isnât regulation. This is punishment disguised as policy. And the worst part? They think weâre dumb enough to keep playing.