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.
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:
Let’s take a look in depth.
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:
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 some of the trustworthy Indian crypto exchanges to research.
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.
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:
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.
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.
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.
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.
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.
Is buying crypto on Binance India safe? Find out in our Best Crypto Exchanges India Guide.
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.
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.
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.
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.
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.
Is buying crypto on WazirX safe? Find out in our Best Crypto Exchanges India Guide.
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.
2. On the next page, select deposit INR to wallet.
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.
4. Once your deposit is complete, go to the spot market on CoinDCX and purchase your cryptocurrency!
Is buying crypto on CoinDCX safe? Find out in our Best Crypto Exchanges India Guide.
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.
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 unrealised gains and losses to help you make more informed decisions about your crypto investments.
The information on this website is for general information only. It should not be taken as constituting professional advice from Koinly. Koinly is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Koinly is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.