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How To Buy Crypto India

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How to Buy Crypto in India

Last updated: Thursday, 13 October 2022

Around 20 million people in India have hopped on the crypto bandwagon - making it one of the most popular investments for 2022. If you want a slice of the Bitcoin pie, here’s how to buy crypto in India… and what you need to know for your taxes.

How to buy crypto in 3 simple steps

Buying crypto is easier than ever as it moves closer and closer towards mainstream adoption. In fact, you can buy crypto in three simple steps:

  1. Find a trusted exchange.
  2. Pick your cryptocurrency.
  3. Buy your crypto.

Let’s take a look in depth.

How to choose a crypto exchange

There are a huge number of Indian crypto exchanges to pick from - but not all crypto exchanges are made equal. So how do you know which is the best crypto exchange to use?

In general, you want to focus on a few things when choosing a crypto exchange:

  • Security
  • Cryptocurrencies available
  • Fees
  • Deposit and withdrawal facility (Fiat & Crypto)

First up, crypto exchanges are a huge target for hackers. That means you need to know your crypto assets are safe. That means choosing a safe crypto exchange - and we can actually help with that. Check out our safest and best crypto exchanges in India guide, where you'll find a list of the most trustworthy Indian crypto exchanges to choose from.

Once you've made sure you've chosen a safe and secure crypto exchange, you'll want to check out that the exchange offers the cryptocurrency you're interested in investing in. Most exchanges offer the market leading cryptocurrencies, but if you're looking for a more obscure altcoin to invest in, you'll need to find an exchange that offers the asset you're after.

Finally, you'll want to check out fees for the exchange you choose. Most exchanges have similar investment fees, although there are definitely exchanges that sit on the higher and lower end of average. Especially if you're investing large amounts, these fees can get quite high, as they're usually a percentage of your overall purchase price.

How to choose a cryptocurrency

It goes without saying no crypto investment is risk free. The decentralised and unregulated nature of crypto means by their very nature they're a high risk investment. This said, with high risk comes high reward - and many early adopters have reaped those rewards. So how do you know which cryptocurrency is the best investment when there are more than 14,000 cryptocurrencies to choose from?

There's no perfect guide for this, but some factors to consider include: 

  • Market capitalization: Market capitalization refers to the total dollar market value of all the coins that have been mined. It can be helpful in assessing the popularity of a given cryptocurrency - as well as helpful in determining the potential profitability of an investment when combined with maximum and total supply.
  • Maximum and total supply: Total supply refers to the total number of coins currently in the market - whether that's circulating or locked. Meanwhile, maximum supply (or fixed supply) refers to the maximum number of coins that will ever be in supply for a given cryptocurrency. For example, the Bitcoin total supply is around 19,170,000 currently. While the Bitcoin maximum supply is 21,000,000. This means there will only ever be 21 million Bitcoins. This scarcity often means the value will be driven up, however, too high a maximum supply can also mean the value will be driven down. 
  • Whitepaper: Cryptocurrencies aren’t just an alternative to fiat currencies - or not all of them are anyway. Many cryptocurrencies are actually focused on solving traditional financial market issues through technology. For example, Solana blockchain aims to be a scalable blockchain to execute smart contracts - pieces of code that automatically execute financial transactions between individuals with no need for a third-party like a bank. You can find out all of this information in the blockchain’s whitepaper. All reputable projects should have a whitepaper and a roadmap indicating development plans and targets.

How to buy your crypto

Now you know the exchange you want to use and the cryptocurrency you want to buy - the only thing left to do is buy your crypto. The steps on each exchange will vary slightly, and for the sake of time, we won’t list steps for all of them, but here’s some step by step instructions on how to buy for some of India’s most popular exchanges including Binance, WazirX and CoinDCX.

How to buy crypto on Binance India

Binance is the largest crypto exchange in the world, where millions of Indian investors can buy crypto through P2P trading. Just follow the below steps to buy your first crypto asset on Binance...

1. On the home page, go to Buy Crypto and select P2P Trading from the dropdown. Please note, the third party payment option for WazirX is currently disabled and Simplex does not work most of the time with Indian credit cards.

Binance how to buy crypto India

2. On the P2P trading pair, select the cryptocurrency you want to buy and select INR under the Fiat dropdown. You can also customize your payment options like NEFT, RTGS, UPI and IMPS by selecting the preferred one under the head Payment. Once you've made your selection, Binance will display a list of sellers to purchase from, all you need to do is pick a seller.

Binance how to buy crypto India

3. In our example, we'll buy USDT from a seller. You'll need to select the amount of crypto you'd like to buy, then click on Buy USDT (or the crypto you're purchasing) to proceed further.

4. On the next page, Binance will display the bank account details of the seller. You'll need to make the payment to the seller's account from your account and upload the transaction screenshot to Binance. Once the seller confirms receipt of the funds, the seller will mark your P2P trade order as approved and the purchase amount will be added to your Binance wallet.

Binance India fees & more

  • Buy method: P2P only (does not support direct bank deposit).
  • P2P charges: 0%.
  • Supported crypto assets in P2P trading: 10+.
  • Payment methods for P2P: UPI, Bank transfer, IMPS, NEFT, RTGS.
  • Crypto deposit and withdrawal: Supports many popular cryptocurrencies.

What does buying on Binance India mean for my taxes?

TDS of 1% is applicable on all P2P trades on Binance India. The buyer needs to deduct 1% TDS on the buy value and deposit it with the ITD, along with Form 26QE within 30 days from end of the month in which purchase was made. Buyer should also collect necessary documents like PAN Card and Aadhaar Card of the seller for his or her records.

Please note, the Income Tax Department (ITD) has not yet made filing of form 26QE available on the Income Tax Portal. Binance is an International exchange and as a result does not comply with TDS provisions as per Indian laws. 

How to buy crypto on WazirX 

WazirX is India’s largest crypto exchange, where Indian users can buy crypto through P2P trading. Follow the below steps to buy your first cryptocurrency on WazirX.

1. To purchase  your first crypto from WazirX, on the home page click on P2P. Unlike Binance, WazirX supports only USDT for P2P trading.

How to buy crypto on WazirX

2. In the Buy window, enter the USDT volume and the price per USDT, then click on Buy. WazirX will then automatically match you with sellers who are selling crypto at the same price.

WazirX how to buy crypto

3. The details of the seller, if matched, will appear on the next screen. It will contain details of bank account and transaction remarks. You will need to make the payment from your WazirX registered bank account to the seller’s bank account and reference the transaction remarks. 

WaxirX how to buy crypto

4. Once the payment is completed, upload the transaction screenshot and click on I have paid. Seller will then confirm the receipt of payment and you will receive the USDT in your WazirX wallet.

WazirX fees & more:

  • Buy method: P2P only (does not support direct bank deposit).
  • P2P charges: 0%.
  • Supported crypto assets in P2P trading: USDT.
  • Payment methods for P2P: UPI, Bank transfer, IMPS, NEFT, RTGS.
  • Crypto deposit and withdrawal: Supports only few cryptocurrencies.

How to buy on CoinDCX

CoinDCX is India’s third largest crypto exchange where Indian investors can buy crypto via a bank deposit. Just follow the steps below to buy your first crypto on CoinDCX.

1. On the home page go to Funds and select INR Wallet from the drop down menu.

How to buy crypto on CoinDCX

2. On the next page, select deposit INR to wallet.

How to buy crypto CoinDCX

3. Enter the amount you'd like to deposit and the method of bank transfer, then select continue to complete the bank transfer, enter the transaction reference number and submit. Your funds will be added to your INR wallet within 1-8 hours.

How to buy crypto CoinDCX

4. Once your deposit is complete, go to the spot market on CoinDCX and purchase your cryptocurrency!

How to buy crypto CoinDCX

CoinDCX fees & more:

  • Buy method: Bank deposit.
  • Deposit fees: 0%.
  • Trading fees: 0.5% of value (fee details here).
  • Payment methods: IMPS, NEFT, RTGS.
  • Crypto deposit and withdrawal: Support for USDT only.

What does buying crypto mean for your taxes?

Buying crypto may or may not be taxed - it all depends on what you're buying your crypto with. You're not taxed when you buy crypto with fiat currency,  like INR, USD or EUR.

However, if you're buying crypto with another cryptocurrency, like buying ETH with BTC, this is a taxable event according to the Indian government. The Income Tax Department views this as two separate transactions: a sell and a buy. When you sell, this is what's known as a disposal and therefore any profits are subject to tax at 30% (plus applicable surcharge and cess). In addition to this, you'll also pay 1% TDS.

TDS is an important consideration when transacting with cryptocurrency - including when you buy crypto. If you're buying via international exchanges like Binance, Huobi, KuCoin and so on, this would mean the buyer would need to deduct 1% TDS and deposit it with the government with the seller's details. Meanwhile, if you buy crypto using an Indian crypto exchange, all TDS compliance is completed by the exchanges - meaning no additional paperwork for buyers or sellers.

TDS will be off-set with your Income tax liability When you file your tax return, your TDS will be offset against your Income Tax liability. If you have more TDS than Income Tax due, you'll be eligible for a refund.

Learn more about India crypto taxes in our guide.

How Koinly can help with your crypto taxes

Koinly is a crypto tax calculator and portfolio tracker - helping you stay on top of your investments and your tax liability, whatever the time of year. Best of all, Koinly is completely free to use, you’ll only ever pay when you want to download a crypto tax report ahead of the tax deadline.

With Koinly - all you need to do is connect the exchanges, wallets and blockchains you use via API or by uploading a CSV file of your transaction history. Once connected, Koinly helps you keep track of all your assets, transactions, gains and losses, income, expenses and more. Koinly even helps you track your unrealized gains and losses to help you make more informed decisions about your crypto investments.

Sign up and try Koinly free today.

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