Can Businesses in India Accept Crypto Legally in 2025?

Can a business in India legally accept Bitcoin, Ethereum, or any other cryptocurrency as payment for goods or services? The short answer is no-not as a payment method. But here’s the twist: you can still legally buy, sell, trade, and hold crypto. You just can’t use it to pay your electric bill, sell a product, or invoice a client like you would with rupees.

What’s Actually Legal?

Cryptocurrency isn’t banned in India. The Supreme Court lifted the RBI’s 2018 banking ban on crypto in 2020, and since then, trading and holding digital assets have been allowed. But being allowed isn’t the same as being approved as money. The government doesn’t recognize crypto as legal tender. That means no business can legally force a customer to pay in Bitcoin, or accept it as settlement for a service. If you try, you’re stepping outside the rules-even if the customer is happy to pay that way.

So what can you do? You can run a crypto exchange. You can offer investment advice on digital assets. You can build blockchain tools. You can even trade crypto yourself. But if you’re a restaurant, a retail store, a freelance designer, or a SaaS company-you can’t put a ‘Pay with Crypto’ button on your website and expect to stay compliant.

The Tax Trap: 30% + 1% TDS

The Indian government doesn’t want to ban crypto. It wants to tax it. And it’s doing so aggressively. Since April 2022, all income from crypto transactions-whether you’re trading, selling, or earning rewards-is taxed at a flat 30%. No deductions. No losses offset. If you bought Bitcoin for ₹500,000 and sold it for ₹700,000, you owe ₹60,000 in tax on the ₹200,000 profit. That’s it. No expenses, no fees, no cost of mining or gas can be subtracted.

And then there’s the 1% Tax Deducted at Source (TDS). Every time you transfer crypto-whether you’re sending it to a friend, selling it on an exchange, or receiving it as payment-you’re triggering TDS. If a customer sends you 0.1 BTC worth ₹300,000, you must withhold ₹3,000 and pay it to the government. You’re now acting as a tax collector. The burden falls on you, not the sender. This applies to every single transaction, no matter how small.

This system isn’t meant to discourage crypto. It’s meant to track it. Every transfer is recorded, reported, and taxed. The Income Tax Department has direct access to exchange data. If you don’t report, you’ll get a notice. And if you’re a business, you’re under far more scrutiny.

Compliance Isn’t Optional: FIU-IND and KYC

If your business handles crypto in any way-even if you’re just holding it as an asset-you’re now classified as a Virtual Digital Asset (VDA) service provider under the Prevention of Money Laundering Act (PMLA). That means you must register with the Financial Intelligence Unit of India (FIU-IND). It’s not a suggestion. It’s mandatory.

Binance got fined over ₹18 crore in 2023 for not registering. Bybit paid ₹9 crore. Both had to comply. That’s the message: if you touch crypto in India, you’re regulated. You need full KYC on every user. You need to monitor every transaction for suspicious activity. You need to keep records for at least five years. You need to report large or unusual transfers. This isn’t like running an online store. It’s like running a bank-with more paperwork.

Even if you’re a small business that occasionally accepts crypto for consulting, you’re still subject to these rules. There’s no exemption for small players. The FIU-IND doesn’t care if you’re a startup or a multinational. If you process crypto, you’re in the system.

The Travel Rule: India’s Hardest Crypto Rule

India is one of the only countries in the world that applies the FATF Travel Rule with zero threshold. That means every crypto transfer, even ₹100 worth, must include full sender and receiver details: full name, address, ID number, wallet address, and purpose of transfer.

Most countries only require this for transfers above ₹50,000 or $1,000. India requires it for everything. That means if you’re a business accepting crypto, you need a system that captures and stores this data for every single transaction. You can’t use a simple wallet app. You need backend integration with KYC verification, audit logs, and reporting tools. For a small business, this isn’t just expensive-it’s technically complex.

Why the Government Won’t Let You Use Crypto as Payment

The Reserve Bank of India (RBI) still calls crypto a ‘threat to financial stability.’ They’re building their own digital rupee, the e-Rupee, which they control. They don’t want private digital currencies competing with it.

The Ministry of Finance sees crypto as a tax opportunity, not a payment revolution. They’ve already locked in the 30% tax and TDS. Letting businesses accept crypto as payment would make it harder to track. It would blur the lines between income, investment, and spending. And that’s the last thing they want.

Meanwhile, SEBI-the stock market regulator-has hinted that crypto could be treated like securities. That means future regulation might focus on trading and investment, not spending. That’s the direction India is heading: crypto as an asset class, not a currency.

What Happens If You Ignore the Rules?

Penalties aren’t theoretical. In 2024, a Pune-based crypto trading platform was shut down after failing to register with FIU-IND. Their bank accounts were frozen. The owners faced money laundering probes. Another business in Bengaluru was fined ₹50 lakh for not filing TDS returns on crypto sales.

Even if you think you’re ‘just helping a friend’ by accepting crypto for a service, you’re still legally responsible. The government doesn’t care about intent. They care about transactions. If it moves, it’s tracked. If it’s tracked and unreported, you’re in trouble.

What’s Coming in 2025? The COINS Act

The proposed Comprehensive Regulation of Cryptographic Assets (COINS) Act, currently under review, could change everything. If passed, it would formally recognize crypto as a legal asset class, require licensing for exchanges, clarify TDS rules, and possibly allow consumer protections for crypto users.

But here’s the catch: even the COINS Act doesn’t propose making crypto legal tender. It won’t let you pay your rent in Dogecoin. It won’t let you invoice a client in Bitcoin. It will likely make crypto trading safer and more transparent-but it won’t turn it into cash.

The government’s goal isn’t to ban crypto. It’s to control it. And control means taxation, tracking, and limiting its use as money.

So What Can a Business Actually Do?

If you want to work with crypto in India, here’s what’s safe:

• Run a crypto exchange or wallet service (with FIU-IND registration)
• Offer crypto investment advice or education
• Build blockchain-based tools or software
• Trade crypto as an investment (and pay your 30% tax)
• Accept crypto as a form of asset investment (e.g., selling NFTs or tokens)

Here’s what’s not safe:

• Accepting crypto as payment for goods or services
• Using crypto to pay suppliers or employees
• Skipping KYC or FIU-IND registration
• Failing to file TDS or report crypto income

If you’re a business owner thinking about accepting crypto, the risk isn’t just legal-it’s financial. The tax burden, compliance costs, and banking restrictions make it far more trouble than it’s worth for most businesses.

Bottom Line

India doesn’t hate crypto. It just doesn’t want you using it to pay for stuff. The rules are clear: you can own it, trade it, and profit from it-but you can’t use it like money. The government is watching every transaction, taxing every gain, and forcing every business to prove they’re not laundering money.

If you’re considering accepting crypto, ask yourself: is the potential customer base worth the legal risk, the 30% tax, the 1% TDS, the KYC overhead, and the chance your bank will cut you off? For most businesses, the answer is no.

The future of crypto in India isn’t about payments. It’s about regulation. And right now, the only businesses thriving are the ones playing by the rules-not the ones trying to bypass them.