Jonathan Jennings Jan 23, 2026

Can Businesses in India Accept Crypto Legally in 2026?

Can a business in India legally accept Bitcoin, Ethereum, or any other cryptocurrency as payment? The short answer is: no-not as a payment method for goods or services. But here’s the twist: you can legally trade it, hold it, and even run a crypto exchange-if you jump through enough hoops.

What’s Actually Allowed?

India doesn’t ban cryptocurrency. You won’t get arrested for owning Bitcoin. But the government also won’t let you use it to pay your supplier, buy inventory, or accept it from customers at your retail store. That’s the key distinction. Cryptocurrencies are classified as Virtual Digital Assets (VDAs) under Indian tax law, not money. That means they’re treated like stocks or gold-something you can own, sell, or trade-but not spend like rupees.

If you’re running a business, you can legally offer crypto trading services, crypto investment advice, blockchain development, or educational courses on digital assets. Many startups in Bengaluru and Pune are doing exactly that. But if you try to accept Dogecoin for your coffee shop’s latte, you’re stepping into legal gray territory. The Reserve Bank of India has never approved crypto as legal tender, and no official policy permits its use in commercial transactions.

Why Can’t You Accept Crypto as Payment?

The core reason is control. The Indian government wants to keep a tight grip on financial flows. If businesses could freely accept crypto, it would be nearly impossible to track where money comes from, who’s paying whom, and whether taxes are being paid. That’s why the government has built a system designed to monitor every crypto movement-not to stop it, but to tax it and trace it.

There’s also the issue of volatility. Imagine you sell a product for 1 Bitcoin today worth ₹50,000. Tomorrow, Bitcoin drops 20%. Now you’ve lost ₹10,000 just holding the asset. Banks won’t help you hedge that risk. Insurance companies won’t cover it. And if a customer disputes a crypto payment, there’s no chargeback system like with credit cards. For most businesses, that’s just too risky.

What Happens If You Do Accept Crypto Anyway?

Technically, you won’t be arrested. But you’ll face serious consequences. The Income Tax Department will see your crypto receipts as taxable income. You’ll owe 30% tax on the value of the crypto at the time you received it-no deductions, no expenses allowed. On top of that, you’ll need to pay 1% TDS (Tax Deducted at Source) on every crypto transaction you receive, even if you’re just buying supplies from another crypto-savvy vendor.

Let’s say you’re a web design agency and a client pays you ₹2 lakh in Ethereum. You must:

Record the value of ETH in INR on the day you received it
Pay ₹60,000 in income tax (30%)
Collect ₹2,000 as TDS from the client and deposit it with the government
Report the transaction to FIU-IND
Keep proof of the transaction for at least six years

Miss any step? You could face penalties, interest, or even a tax raid. The government has already fined Binance ₹18.8 crore and Bybit ₹9.2 crore for failing to register with FIU-IND. Smaller businesses don’t get a pass.

Startup team in India working on blockchain compliance with tax documents and FIU-IND certificate.

Compliance Is Non-Negotiable

If you’re even thinking about touching crypto in a business context, you need to register with the Financial Intelligence Unit of India (FIU-IND). This isn’t optional. Since March 2023, any entity dealing with crypto-whether you’re an exchange, wallet provider, or even a crypto-focused consultancy-must comply with the Prevention of Money Laundering Act (PMLA). That means:

Full KYC on every customer: ID, address, source of funds
Real-time transaction monitoring for suspicious activity
Reporting all crypto transfers over ₹50,000 (and even smaller ones if flagged)
Implementing anti-fraud systems that match bank standards

Many small businesses think they can skip this if they’re just accepting crypto occasionally. They can’t. FIU-IND doesn’t care if you’re a one-person shop. If you process crypto, you’re a regulated entity. And they’re watching.

The Tax Trap

The 30% tax on crypto income is brutal. Unlike stocks, where you can offset losses against gains, crypto losses can’t be carried forward. If you bought Bitcoin for ₹10 lakh and sold it for ₹7 lakh, you can’t use that ₹3 lakh loss to reduce your tax on other income. You pay 30% on whatever profit you made, even if you lost money elsewhere.

And the 1% TDS? It hits cash flow hard. If you receive ₹10 lakh in crypto, you must collect ₹10,000 from the payer and hand it over to the government. That’s money you can’t use for payroll, rent, or inventory. Many businesses don’t realize this until they get a notice from the tax department demanding payment.

What’s Coming Next? The COINS Act 2025

There’s a proposed law called the Comprehensive Regulation of Cryptographic Assets (COINS) Act, 2025. If passed, it could change everything. The draft suggests:

Formal legal recognition of crypto as an asset class
Licensing of exchanges under RBI supervision
Clearer TDS rules and possible deductions for trading fees
Consumer protection against scams and fraud
Defined rules for businesses using crypto in transactions

This could mean businesses might eventually be allowed to accept crypto as payment-if they’re licensed and compliant. But there’s no timeline. The bill is still in discussion. It could pass next year. Or it could stall for five years. Waiting for it isn’t a strategy.

Individual reviewing crypto tax documents at night under a lamp, with COINS Act draft nearby.

Real Business Models That Work in India

If you want to operate legally in India’s crypto space, focus on services-not payments:

Crypto exchanges: Register with FIU-IND, do KYC, charge trading fees.
Crypto education platforms: Teach people how to trade, store, or invest. No money changing hands? No problem.
Blockchain development firms: Build apps, smart contracts, or token systems for clients. You’re paid in rupees.
Crypto investment advisory: Give advice. Don’t hold or trade client funds unless you’re registered as an investment advisor under SEBI.
Consulting for compliance: Help other businesses set up KYC, TDS, and FIU-IND reporting systems.

These models are legal, profitable, and growing. In 2025, India had over 15 million active crypto users. That’s a big market for services-even if you can’t accept crypto as payment.

Banking Is Still a Problem

Even if you’re 100% compliant, getting a bank account is hard. Many banks still refuse to work with crypto businesses because of past risks and unclear guidelines. Some fintechs and neobanks are starting to open doors, but you’ll need to shop around. Expect higher fees, stricter monitoring, and more paperwork than a regular business account.

Some businesses use third-party payment processors that convert crypto to INR instantly. But these services often charge 3-5% in fees and may not be fully compliant. Use them at your own risk.

Bottom Line: Play It Safe

India’s crypto rules aren’t about stopping innovation. They’re about control. The government wants to tax it, track it, and regulate it-not ban it. So if you’re a business owner, here’s what to do:

Don’t accept crypto as payment for goods or services.
If you’re trading or holding crypto, keep perfect records of every transaction.
Register with FIU-IND if you’re a service provider.
Pay 30% tax on gains, plus 1% TDS on every transfer.
Stay updated. The COINS Act could change everything-but don’t bet your business on it.

India isn’t anti-crypto. It’s anti-unregulated-crypto. Play by the rules, and you can build a thriving business. Break them, and you’ll be on the government’s radar-for the wrong reasons.

Can I legally accept Bitcoin as payment for my services in India?

No. While owning or trading Bitcoin is legal in India, businesses cannot legally accept it as payment for goods or services. The government does not recognize cryptocurrency as legal tender, and using it for transactions creates compliance risks, including tax penalties and potential violations of PMLA rules.

What taxes do I pay if I receive crypto as income?

You pay a flat 30% income tax on the value of the crypto received in INR at the time of receipt. No deductions are allowed except the original cost of acquiring the asset. Additionally, you must collect and remit 1% TDS on every crypto transaction you receive, regardless of size. Failure to report can trigger tax raids or penalties.

Do I need to register with FIU-IND if I accept crypto?

Yes-if you’re a business that handles, trades, or facilitates crypto transactions, you must register with FIU-IND under the Prevention of Money Laundering Act. This includes exchanges, wallet providers, and even consultants who process crypto payments. Failure to register can result in heavy fines, as seen with Binance and Bybit.

Can I use crypto to pay my employees or suppliers?

No. Paying employees or suppliers in cryptocurrency is not permitted under current Indian law. Salaries must be paid in Indian rupees. Suppliers must be paid through recognized banking channels. Using crypto for payroll or procurement exposes your business to tax, compliance, and legal risks.

Is the COINS Act 2025 going to let businesses accept crypto?

The COINS Act 2025 is still under discussion and has not been passed. While it may introduce clearer rules for crypto businesses-including possible permission to use crypto in transactions-it’s not guaranteed. Even if passed, it will likely require licensing, strict KYC, and government oversight. Don’t base business decisions on unenacted laws.

What happens if I ignore crypto tax rules?

Ignoring crypto tax rules can lead to penalties of up to 200% of the tax evaded, interest charges, and even criminal proceedings for willful evasion. The Income Tax Department uses blockchain analytics tools to trace crypto transactions. Many businesses have received notices for undeclared crypto income-even if they thought it was private.

Can I open a bank account for my crypto business in India?

It’s difficult, but not impossible. Many traditional banks still avoid crypto businesses due to regulatory uncertainty. Some fintechs and neobanks now offer accounts to compliant FIU-IND-registered entities, but expect higher fees, stricter monitoring, and more documentation than a standard business account.

Are crypto airdrops or rewards taxable in India?

Yes. Any crypto received as an airdrop, referral bonus, or reward is treated as income and taxed at 30%. You must report the INR value of the asset on the day you received it. Even small amounts from DeFi platforms or NFT giveaways are taxable.

Can foreign businesses accept Indian customers’ crypto payments?

If your business is based outside India but accepts crypto from Indian customers, you’re still subject to Indian tax and compliance rules. The FIU-IND requires all platforms serving Indian users to register, regardless of location. Failure to comply can result in your platform being blocked in India, as happened with several international exchanges in 2023.

What’s the safest way to get involved with crypto in India as a business?

The safest path is to offer crypto-related services-like education, consulting, or blockchain development-while being paid in Indian rupees. Avoid accepting crypto as payment. Register with FIU-IND if required. Keep meticulous records. Pay your taxes. Stay updated on the COINS Act. This approach keeps you compliant, profitable, and out of legal trouble.