Can Indian Businesses Legally Accept Crypto in 2025?

India cryptocurrency regulations have left many entrepreneurs wondering whether they can take crypto payments without breaking the law. The short answer: you can run a crypto‑related business, but you cannot use crypto as a direct payment method for goods or services until the rules change. Below is a quick cheat‑sheet to know where you stand.

• Crypto transactions are not banned, but they are not legal tender.
• All crypto income is taxed at 30%+4% cess; a 1% TDS applies to every transfer.
• Businesses must register with the Financial Intelligence Unit‑India (FIU‑IND) and follow RBI‑style KYC/AML.
• Using crypto as a payment method for customers is still prohibited.
• The pending COINS Act could redefine the whole landscape.

What the law actually says

In October 2025 the regulatory picture is a classic "legal grey area". The Supreme Court's 2020 decision in Internet and Mobile Association of India v Reserve Bank of India overturned the RBI's blanket ban on crypto transactions, leaving the door open for future legislation clarified that crypto trades are allowed, but it also reminded everyone that Parliament can still outlaw them.

Today, crypto is treated as a Virtual Digital Asset (VDA) any token or piece of information created through cryptography, as defined in Section2(47A) of the Income Tax Act, 1961. This definition deliberately excludes the Indian rupee, meaning digital assets sit in their own tax bucket.

Taxing crypto: the 30% flat rate and 1% TDS

Since the Income Tax (No.2) Bill received presidential assent on 22August2025, every rupee earned from VDA transactions is taxed at a flat 30% plus a 4% cess. No deductions are allowed except the cost of acquiring the asset. In practice, that means if you sell Bitcoin for ₹10lakhs, you owe ₹3lakhs in tax plus ₹12k in cess.

On top of that, a 1% Tax Deducted at Source (TDS) is levied on **every** crypto transfer, no matter how small. The payer must deduct the tax and remit it to the Income Tax Department, then issue a TDS certificate to the recipient. This rule has a huge cash‑flow impact for merchants who would otherwise receive crypto instantly.

AML, KYC and the FIU‑IND mandate

March2023 was a turning point. The government brought crypto service providers under the Prevention of Money Laundering Act (PMLA) the primary anti‑money‑laundering legislation in India. As a result, any platform dealing with VDAs must adopt banking‑grade Know‑Your‑Customer (KYC) and Anti‑Money‑Laundering (AML) procedures, overseen by the Financial Intelligence Unit‑India (FIU‑IND) the agency that enforces AML compliance for crypto firms.

Registration with FIU‑IND is now mandatory, even for foreign exchanges serving Indian users. Non‑compliance has already led to hefty fines: Binance paid INR1,882,00,000 and Bybit INR927,00,000. Both platforms subsequently secured FIU‑IND registration, underscoring that the regulator means business.

The FATF Travel Rule - no thresholds, full data

India has adopted the Financial Action Task Force (FATF) Travel Rule without a minimum transaction amount. Every crypto transfer must include the sender’s and receiver’s full name, address, and VDA wallet IDs. This requirement forces businesses to maintain detailed transaction logs and to invest in compliance software that can capture and report the data in real time.

Can you accept crypto as payment?

Here’s the bottom line: **no**. While you can buy, sell, and hold VDAs, the law explicitly bars using crypto as a legal tender for goods or services. The Reserve Bank of India (RBI) has repeatedly warned that treating crypto like rupees threatens monetary stability. Consequently, most Indian merchants who want to offer crypto as a payment option have to route the transaction through a fiat conversion step - the customer pays in crypto, the merchant’s gateway instantly converts it to rupees, and the merchant never actually receives crypto.

Current business models that are legal

• Operating a crypto exchange or brokerage.
• Providing investment advisory or portfolio management for VDAs.
• Developing blockchain solutions for enterprise clients.
• Running educational platforms, newsletters, or research services about crypto.
• Facilitating crypto‑to‑fiat conversion services (provided the final settlement is in INR).

All of the above require FIU‑IND registration, strict KYC/AML, and full tax compliance.

Upcoming COINS Act 2025 - what could change?

The Comprehensive Regulation of Cryptographic Assets (COINS) Act 2025 a draft bill currently being debated in Parliament that aims to give crypto assets a clear legal status could reshape everything. If enacted, the Act would:

• Define crypto assets as a separate asset class, giving them a statutory definition.
• Introduce a licensing regime for exchanges, likely overseen by the RBI.
• Offer tax deductions for trading fees and clarify the TDS mechanism.
• Provide consumer‑protection measures against fraud and Ponzi schemes.
• Potentially relax the prohibition on using crypto for direct payments, aligning India with the EU’s MiCA framework.

Until the COINS Act is passed, businesses must plan for the status‑quo but stay ready to adapt.

Practical compliance checklist for Indian crypto businesses

Compliance Checklist - Must‑Do Items

Area	Requirement	Key Deadline / Frequency
Taxation	Flat 30% tax + 4% cess on VDA income; 1% TDS on every transfer	Monthly TDS remittance; Annual tax return by 31July
Registration	FIU‑IND registration and obtain registration number	Upon launch of any VDA service
KYC/AML	Collect full name, address, PAN, and VDA wallet ID for each user	At onboarding; update annually
Travel Rule	Record and transmit sender‑receiver data for every transfer	Real‑time reporting
Record‑keeping	Maintain transaction logs for 8years	Continuous

Side‑by‑side view: Current Framework vs. Proposed COINS Act

Current vs. COINS Act

Aspect	Current (2025)	Proposed COINS Act
Legal status of crypto	Virtual Digital Asset; not legal tender	Recognized asset class with statutory definition
Tax rate	Flat 30% + 4% cess; 1% TDS	Potential deductions for fees; clearer TDS rules
Regulatory body	FIU‑IND (AML), CBDT (tax), RBI (policy)	RBI‑led licensing authority plus FIU‑IND coordination
Payment usage	Prohibited as direct payment	Likely to allow crypto payments under regulated conditions
Consumer protection	Minimal; advice‑only warnings	Explicit safeguards against fraud and Ponzi schemes

Steps to get started today

1. Confirm your business model fits one of the legally permitted categories (exchange, advisory, blockchain development, etc.).
2. Apply for FIU‑IND registration. Prepare KYC/AML policies that capture PAN, address, and wallet IDs.
3. Set up accounting software that can calculate 30% tax and automatically deduct 1% TDS on each transaction.
4. Integrate a travel‑rule compliant transaction monitoring tool - many global providers now offer India‑specific modules.
5. Open a corporate bank account that allows crypto‑related inbound/outbound transfers; be ready for higher scrutiny.
6. Document every step and keep records for eight years to survive any audit.
7. Monitor legislative updates on the COINS Act so you can pivot quickly if payment‑in‑crypto becomes legal.

What to watch in the next 12‑18 months

The biggest unknown is whether Parliament will pass the COINS Act before the next general election. Keep an eye on:

• Statements from the Ministry of Finance during the annual budget - they often hint at upcoming crypto legislation.
• RBI’s progress on its Central Bank Digital Currency (CBDC); a successful CBDC rollout may shift its stance on private crypto.
• SEBI’s public consultations on crypto market regulation - they could introduce a joint‑regulatory framework.

Adapting early to stricter AML rules will future‑proof your business, regardless of which legislative path the country takes.