How to Buy Crypto with Fiat in India: Step-by-Step Guide for 2026
Buying cryptocurrency with Indian rupees isn’t illegal - but it’s not simple either. If you’re trying to buy Bitcoin, Ethereum, or any other coin using your bank account or UPI, you’re navigating a maze of taxes, compliance rules, and platform-specific limits. The good news? Millions of Indians are doing it right every day. The bad news? One wrong step can cost you money, time, or worse - your coins.
Is It Legal to Buy Crypto with Rupees in India?
Yes. The Supreme Court overturned the Reserve Bank of India’s 2018 ban in 2020, and since then, buying, selling, and holding crypto has been legal. But legality doesn’t mean freedom. The government slapped a 30% tax on all crypto profits, plus a 4% cess, starting April 1, 2022. That’s one of the highest rates in the world. On top of that, every time you buy crypto with fiat, 1% is automatically deducted as Tax Deducted at Source (TDS) if you’re using a compliant exchange. That’s not optional. It’s built into the transaction.What You Need Before You Start
You can’t just sign up and buy. India’s rules demand identity verification. Here’s what you need ready:- A valid PAN card (Permanent Account Number)
- Your Aadhaar card (government ID linked to biometrics)
- A smartphone with a working camera
- An active UPI ID (like Google Pay, PhonePe, or Paytm)
- A bank account in your name
How to Buy Crypto: Step-by-Step
Follow these steps exactly. Skip one, and you’ll hit a wall.- Choose an exchange - Pick one that supports UPI and complies with TDS. WazirX, CoinDCX, and ZebPay are your safest bets.
- Sign up - Use your email and phone number. Avoid using Gmail aliases or temporary numbers. Exchanges track these.
- Complete KYC - Upload your PAN and Aadhaar. Take the selfie as instructed. This takes 5 to 30 minutes, depending on how fast the system processes it.
- Link your UPI - Add your UPI ID (e.g., yourname@upi). Some exchanges let you link multiple UPI apps. That’s useful if you hit daily limits.
- Deposit INR - Minimum deposit? WazirX lets you start with ₹100. ZebPay and CoinDCX also accept ₹100. Binance India requires ₹500 for bank transfers. UPI deposits are instant. Bank transfers take 1-2 days.
- Buy crypto - Search for the coin you want (BTC, ETH, SOL, etc.). Enter the amount in rupees. Confirm. The 1% TDS is deducted before your coins arrive. You’ll see the final amount credited to your wallet.
That’s it. You now own crypto. But you’re not done. You need to track your taxes.
Top 4 Exchanges for Buying Crypto with Rupees in 2026
Not all exchanges are equal. Here’s what’s working right now:| Exchange | Min Deposit | Payment Methods | Trading Fee | TDS Compliance | Coin Selection | Best For |
|---|---|---|---|---|---|---|
| WazirX | ₹100 | UPI, Bank Transfer | 0.20% (flat) | Yes | 300+ | Beginners, UPI users |
| ZebPay | ₹100 | UPI, Bank Transfer | 0.15%-0.50% (tiered) | Yes | 75 | Mobile users, simple interface |
| CoinDCX | ₹100 | UPI, Bank Transfer | 0.10%-0.40% | Yes | 250+ | Active traders, low fees |
| Kraken | ₹2,000 | Bank Transfer Only | 0.00%-0.16% | No | 500+ | Advanced traders, low fees |
WazirX is the easiest for beginners. ZebPay has the best mobile app. CoinDCX gives you the lowest fees if you trade often. Kraken is powerful but risky - it doesn’t deduct TDS, so you’re on the hook for calculating and paying it yourself. That’s a common trap. Many users forget and end up with tax notices.
What You Must Know About Taxes
This isn’t optional. You will be taxed. Here’s how it works:- 30% tax on profits - If you bought BTC at ₹90 lakh and sold at ₹98 lakh, you pay 30% on the ₹8 lakh gain. No deductions. No offsetting losses.
- 4% cess - Added on top of the 30%. So your effective rate is 31.2%.
- 1% TDS - Every time you buy crypto with rupees, 1% is taken out. This is not your final tax. It’s a prepayment. You still owe the 30% on your yearly profit.
- No loss offset - If you lost money on Ethereum but made money on Bitcoin, you can’t use the loss to reduce your tax bill. That’s unique to crypto in India.
Exchanges like WazirX and CoinDCX now generate annual tax reports you can download. Use them. Don’t guess. The Income Tax Department has access to your transaction data. If you underpay, you’ll get a notice - and penalties.
Security: Don’t Get Hacked
In 2024, Indian users lost over ₹9 crore to crypto theft. Most of it happened because people left coins on exchanges. Exchanges are not banks. They can be hacked. ZebPay had a hot wallet breach in 2024. Binance India has had phishing scams targeting Indian users.Here’s how to stay safe:
- Enable two-factor authentication (2FA) - Use an authenticator app like Google Authenticator or Authy. Never use SMS.
- Set withdrawal whitelists - Only allow transfers to addresses you’ve pre-approved.
- Don’t reuse passwords - If you use the same password for your email and exchange, you’re one leaked password away from losing everything.
- Move large holdings offline - Use a hardware wallet like Ledger Nano S+ (₹11,999). Only keep what you’re trading on the exchange.
95% of coins on Indian exchanges are stored in cold wallets. That’s good. But your account? That’s online. And that’s where hackers strike.
What’s Next? CBDC and Regulation
The Reserve Bank of India launched its own digital currency - the Digital Rupee - in November 2025. It’s still in pilot mode, but it’s a signal. The government isn’t against digital money. It just wants to control it.The proposed Crypto Asset Regulation Bill, still under review since early 2023, could bring clearer rules - or stricter bans. Experts believe India will allow crypto but keep it tightly regulated. That means:
- More exchanges will shut down if they don’t comply with TDS and KYC.
- Foreign exchanges like Coinbase already left in 2023. More may follow.
- Expect more tools for tax reporting and automated compliance.
Don’t wait for perfect regulation. It won’t come. The market is moving fast. 8.1% growth in 2025, 25 million users expected by 2027. If you’re waiting for the government to make it easy, you’ll miss the window.
Real Stories: What Works and What Doesn’t
A 19-year-old student in Pune started buying ₹100 of Bitcoin every day on WazirX in 2023. Today, his portfolio is worth ₹2.8 lakh. He didn’t time the market. He just kept buying. A 32-year-old engineer in Bangalore used Binance India because it had more coins. He forgot about TDS. He didn’t track his gains. In March 2026, he got a tax notice for ₹1.4 lakh in unpaid tax. He’s now paying in installments. A couple in Hyderabad used the same password for their email and exchange. A phishing email stole their login. They lost ₹4.2 lakh in ETH and SOL in 48 hours.These aren’t rare. They’re common. Learn from them.
Final Advice: Start Small, Stay Compliant
You don’t need to invest ₹1 lakh to start. ₹100 is enough. Use WazirX or CoinDCX. Do your KYC. Link UPI. Buy your first coin. Watch what happens. Track your transactions. Download your tax report every year.Don’t chase moonshots. Don’t borrow money. Don’t ignore taxes. Crypto in India isn’t a get-rich-quick scheme. It’s a long-term financial tool - if you play by the rules.
India’s crypto future belongs to those who are careful, consistent, and compliant. Not the ones who take shortcuts.
Can I buy crypto with UPI in India?
Yes. UPI is the fastest and most popular way to buy crypto in India. Exchanges like WazirX, ZebPay, and CoinDCX support instant UPI deposits. Transactions settle in under 15 seconds. You need a UPI ID linked to your bank account and a valid KYC on the exchange.
Is crypto trading taxable in India?
Yes. All crypto profits are taxed at 30%, plus a 4% cess. That’s 31.2% total. You also pay 1% TDS on every purchase. Losses cannot be offset against gains. You must report all transactions in your income tax return.
Which exchange is best for beginners in India?
WazirX is the best for beginners. It has the lowest minimum deposit (₹100), instant UPI deposits, simple interface, and built-in tax reports. It’s also the most trusted platform with over 14,000 positive reviews on Trustpilot.
Can I use Binance in India?
Yes, but with risks. Binance India allows trading, but it does not automatically deduct TDS. You must calculate and pay 1% TDS yourself. Many users forget, leading to tax penalties. It’s better for experienced traders who track their taxes closely.
What happens if I don’t pay crypto taxes in India?
You’ll receive a notice from the Income Tax Department. Penalties can include 100% to 300% of the unpaid tax, interest at 1% per month, and in extreme cases, legal action under the Prevention of Money Laundering Act. The government has direct access to exchange data - hiding is not an option.
Should I keep my crypto on an exchange or use a wallet?
For small amounts you’re actively trading, keeping crypto on an exchange is fine. For larger amounts or long-term holds, use a hardware wallet like Ledger Nano S+. Over 70% of Indian users leave coins on exchanges - and that’s where most thefts happen.
