Supreme Court Crypto Ruling in India: What the Landmark Decision Means for Traders

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India imposes 30% tax on profits + 1% TDS on transactions above ₹10,000

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Important: The 30% tax applies to all gains regardless of holding period. TDS is 1% on every transaction over ₹10,000.

Before March 2020, if you wanted to buy Bitcoin in India, you had to find someone willing to trade cash in person. Banks had been ordered to cut off all services to cryptocurrency exchanges. No deposits. No withdrawals. No trading. It wasn’t illegal to own crypto - but it was practically impossible to use it. Then the Supreme Court crypto ruling in India changed everything.

The Ban That Didn’t Add Up

In April 2018, the Reserve Bank of India (RBI) issued a circular banning all banks and financial institutions from providing services to crypto businesses. The move was meant to protect consumers from volatility and fraud. But it didn’t stop people from trading. It just forced them underground. Exchanges like WazirX and CoinDCX lost access to bank accounts. Users couldn’t cash out. The entire ecosystem froze.

The Supreme Court didn’t agree. In March 2020, after a legal challenge from the Internet and Mobile Association of India, the court ruled the RBI’s ban was unconstitutional. The judges said the central bank had no right to impose a blanket ban without evidence of harm to the financial system. The ruling didn’t legalize crypto - it just removed the government’s main tool to shut it down.

This wasn’t a green light. It was a stop sign pulled down. For the first time, Indians could legally use banks to trade Bitcoin, Ethereum, and other digital assets. Within months, user numbers on Indian exchanges jumped by 300-400%. By 2025, an estimated 15 to 20 million Indians owned cryptocurrency - making India one of the top five countries in global adoption.

What the Court Actually Said

The Supreme Court’s decision was built on two key legal principles: proportionality and constitutional rights. The court found that the RBI’s ban was too broad. It punished every crypto user because a few might be involved in fraud or money laundering. That’s like banning all cars because some are used in robberies.

The judges pointed out that no law in India made cryptocurrency illegal. The RBI, as a regulator, couldn’t create its own criminal law. Only Parliament could do that. And Parliament hadn’t acted. So the court stepped in to prevent regulatory overreach.

Justice B.R. Gavai and Justice N. Kotiswar Singh emphasized that innovation shouldn’t be crushed by fear. They warned that shutting down an entire technology sector without clear evidence of harm could hurt India’s digital economy and push talent abroad.

But There’s a Catch - Taxes and Uncertainty

Just because you can trade crypto doesn’t mean it’s easy. The government responded to the court’s ruling not with regulation, but with taxes.

In 2022, India introduced two harsh rules:

  • 30% tax on all profits from crypto trades - no deductions, no losses offset, no matter how long you held the asset.
  • 1% Tax Deducted at Source (TDS) on every crypto transaction above ₹10,000.
These are among the highest crypto tax rates in the world. Compare that to the U.S., where capital gains tax is based on income and holding period, or the EU, where rules vary but are generally more balanced. In India, even if you make ₹1,000 from trading Bitcoin, you owe ₹300 in tax. And if you buy another coin with that ₹1,000, you pay ₹10 more in TDS - even if you didn’t cash out.

This has created a paradox. The Supreme Court said you can trade. The government says, “Sure, but it’ll cost you.”

Indian trader surrounded by tax forms and crypto icons in a chaotic, glowing workspace.

What About DeFi, NFTs, and Cross-Border Trades?

The 2020 ruling only cleared the way for basic buying and selling. It didn’t address the newer parts of crypto: decentralized finance (DeFi), non-fungible tokens (NFTs), or crypto-to-crypto swaps. These are now huge in India, but there’s no official guidance on how to report them for taxes.

If you use a DeFi protocol like Uniswap to swap Ethereum for Solana, do you owe tax? If you buy an NFT from a foreign creator, is that a capital gain? The Income Tax Department hasn’t said. Many traders are guessing - and risking penalties.

Legal experts say the lack of clarity is the biggest threat. The Supreme Court removed a ban, but the government hasn’t replaced it with rules. That leaves investors in legal limbo.

What the Court Is Saying Now - 2025

The Supreme Court hasn’t stayed quiet since 2020. In October 2025, the court questioned the government directly about why it hasn’t passed a crypto law after five years. Justice Surya Kant called unregulated Bitcoin trading “nothing but a more polished form of Hawala” - referring to India’s traditional underground money transfer system.

That might sound like a warning. But the court also made it clear: outright bans won’t work. Global finance is changing. Digital assets are here to stay. India can’t afford to ignore them.

The court is now pushing the government to act. It’s not asking for a ban. It’s asking for a framework - one that protects users, prevents fraud, and keeps innovation alive.

Open door to crypto freedom leading to entrepreneurs fleeing to global hubs under shadowy bureaucracy.

Why This Matters for You

If you’re an Indian crypto trader, the 2020 ruling gave you freedom. But freedom without rules is risky.

You can trade legally. But you must:

  • Keep records of every transaction - buys, sells, swaps, and transfers.
  • Calculate your gains and losses accurately - even if you trade between coins.
  • Pay 30% tax on profits, plus 1% TDS on every trade above ₹10,000.
  • File your taxes under the “Income from Capital Gains” section.
Many traders are hiring accountants just to handle crypto taxes. Some are using software tools to track transactions across wallets and exchanges. Others are avoiding trades altogether because the tax burden feels unfair.

The result? India has millions of crypto users - but few crypto startups. Companies that build wallets, DeFi apps, or blockchain tools are moving to Singapore, Dubai, or Portugal, where rules are clearer and taxes are lower.

What’s Next?

The government has a draft bill - the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 - that proposes banning private cryptocurrencies and launching a digital rupee. But it’s been stuck for four years.

The Supreme Court is running out of patience. If the government still doesn’t act by early 2026, the court might step in again - this time to set basic rules itself.

For now, the legal status of crypto in India is clear: it’s allowed. But the rules around it are messy, expensive, and uncertain.

The Supreme Court didn’t give you a free pass. It gave you a chance - to trade, to grow, to innovate. Now it’s up to the government to make sure that chance doesn’t turn into a trap.

What You Should Do Today

1. Track every transaction - use a crypto tax tool like Koinly or CoinTracker to log buys, sells, and swaps.

2. Save receipts - keep screenshots of trade confirmations and wallet addresses.

3. Know your tax liability - 30% on gains, 1% TDS on every trade over ₹10,000.

4. Don’t ignore filings - even small trades need to be reported.

5. Stay updated - the government could change rules at any time. Follow the Supreme Court’s next hearings.

The ruling in 2020 opened the door. Don’t let confusion close it.

Is cryptocurrency legal in India after the Supreme Court ruling?

Yes, cryptocurrency is legal in India. The Supreme Court’s 2020 ruling struck down the Reserve Bank of India’s ban on banks serving crypto businesses. You can buy, sell, and hold Bitcoin, Ethereum, and other digital assets without breaking the law. However, the government has not passed a formal regulatory law, so the legal environment remains uncertain.

What is the crypto tax rate in India?

India imposes a flat 30% tax on all profits from cryptocurrency trades, regardless of how long you held the asset. There are no deductions for losses or expenses. Additionally, a 1% Tax Deducted at Source (TDS) applies to every crypto transaction above ₹10,000, whether you’re buying, selling, or swapping coins. These are among the highest crypto tax rates in the world.

Does the Supreme Court ruling apply to DeFi and NFTs?

The 2020 Supreme Court ruling only addressed the RBI’s banking ban on cryptocurrency exchanges. It did not clarify the legal status of DeFi protocols, NFT trading, or cross-border crypto transfers. These activities are not banned, but there are no official guidelines on how to report them for tax or legal purposes. Traders are operating in a gray area.

Why hasn’t the Indian government passed a crypto law yet?

The government introduced the Cryptocurrency and Regulation of Official Digital Currency Bill in 2021, which proposed banning private cryptocurrencies and launching a central bank digital currency (CBDC). But the bill has been delayed for over four years. The Supreme Court has repeatedly criticized this inaction, calling it a “blind eye” to regulatory needs. Political uncertainty and conflicting interests within the government are the main reasons for the delay.

Can Indian banks still refuse to work with crypto exchanges?

No, not legally. After the Supreme Court’s 2020 ruling, banks can no longer refuse services to crypto businesses solely because they deal in digital assets. However, some banks still impose unofficial restrictions by closing accounts under vague reasons like “high-risk activity.” This creates friction, but it’s not a legal ban - it’s a workaround that’s being challenged in courts.

Is the Supreme Court pro-crypto or anti-crypto?

The Supreme Court is neither pro- nor anti-crypto. It’s pro-rule-of-law. The court blocked the RBI’s ban because it was disproportionate and lacked legal authority. It has consistently said that crypto is not illegal, but it also recognizes risks like fraud and money laundering. The court’s message is clear: regulate properly, don’t ban blindly.

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17 Comments

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    DeeDee Kallam

    November 2, 2025 AT 14:29
    i just bought some btc last week and my bank froze my accnt again lol. like wtf. they say its 'high risk' but im not even trading just hodling. they dont even know what crypto is but they act like its a crime.
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    Helen Hardman

    November 2, 2025 AT 22:43
    Honestly this ruling was a game changer for so many of us who just wanted to be part of something new. I remember trying to buy crypto in 2019 and having to meet strangers in coffee shops with cash. It felt like a spy movie. Now I can just use my UPI app and move on with my life. The 30% tax is brutal, sure, but at least I’m not hiding in shadows anymore. We’ve come so far, even if the government is still playing catch-up with a blindfold on.
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    Nadiya Edwards

    November 3, 2025 AT 15:19
    This whole crypto thing is just another Western scam dressed up as innovation. India doesn’t need digital money. We need food, schools, roads. Let the rich gamble with their bitcoins while the rest of us struggle. The court should’ve left the ban in place. This isn’t progress-it’s exploitation disguised as freedom.
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    Ron Cassel

    November 3, 2025 AT 16:34
    The Supreme Court got played. This isn’t about rights-it’s about the deep state letting Wall Street in through the back door. Crypto is a Ponzi scheme wrapped in blockchain buzzwords. The 1% TDS? That’s just the IRS letting you know they’re watching. Wait till they start tracking wallet addresses like GPS trackers. They’re building the surveillance state one coin at a time.
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    Malinda Black

    November 5, 2025 AT 03:22
    To anyone new to crypto in India: don’t panic about the taxes. Yes, 30% sounds insane, but if you keep good records and use tools like Koinly, it’s totally manageable. I started with just ₹5000 and now I’ve helped two friends set up their own tracking systems. You don’t need to be an expert-you just need to be consistent. And if you’re scared of DeFi? Start small. Learn one thing at a time. We’re all figuring this out together.
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    ISAH Isah

    November 6, 2025 AT 01:11
    The ruling was a legal technicality not a moral victory the RBI acted out of caution the court acted out of procedure but no one asked what happens when the money leaves the country and never comes back the system is fragile and the people are the collateral
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    Chris Strife

    November 6, 2025 AT 10:17
    30% tax on gains and 1% on every transaction? That’s not regulation. That’s extortion. They want you to pay just to play their game. Meanwhile, the same government is building a digital rupee that’ll track every rupee you spend. So you can’t trade crypto without paying a fortune but you’ll be forced to use their digital currency? Sounds like a trap.
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    Mehak Sharma

    November 8, 2025 AT 05:13
    As someone who trades daily in Mumbai I can tell you the real enemy is not the tax but the silence from the government. No clarity on NFTs no guidance on DeFi swaps no official stance on foreign wallets. We are left guessing and the IT department is waiting to slap penalties on those who guess wrong. The court gave us space to breathe but the ministry is holding our nose shut. We need a law not a tax code written by accountants with no vision
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    bob marley

    November 8, 2025 AT 16:21
    Oh wow look at all these crypto bros acting like they’re pioneers. You’re not building the future-you’re just gambling with your rent money. And the 30% tax? That’s just the government laughing while you pay them to keep your dreams alive. Wake up.
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    Jeremy Jaramillo

    November 10, 2025 AT 02:41
    I’ve talked to a lot of Indian traders who are terrified to file taxes because they don’t understand the rules. That’s not their fault. The government should’ve created a simple guide-maybe even a free tool-instead of just slapping on taxes and walking away. Education isn’t optional here. If you want people to participate responsibly, you have to meet them where they are, not punish them for not knowing the fine print.
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    Sammy Krigs

    November 11, 2025 AT 18:09
    i just got a 1% tds on a 10000rs trade and i thought it was a bug then i realized oh right this is india and everything is a tax now. why does every transaction feel like a robbery
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    naveen kumar

    November 13, 2025 AT 06:47
    The Supreme Court ruling was a mistake. Crypto is not a currency. It is speculation disguised as technology. The fact that millions are investing shows how little financial literacy exists in India. The government should have banned it outright and invested in real infrastructure instead of letting people lose money on digital ghosts.
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    Bruce Bynum

    November 14, 2025 AT 03:18
    Keep trading. Keep learning. Don’t let the taxes scare you off. The rules will change. But the opportunity won’t disappear.
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    Wesley Grimm

    November 14, 2025 AT 09:38
    15-20 million users? That’s not adoption. That’s desperation. Most of these people are buying because they think it’s the next lottery ticket. The tax structure is designed to extract revenue, not encourage innovation. This isn’t a market-it’s a tax farm.
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    Masechaba Setona

    November 14, 2025 AT 23:12
    lol India bans crypto then taxes it into oblivion while the US lets you deduct losses and the EU has sane rules. Meanwhile we’re stuck with 30% tax and 1% TDS on every swap like we’re paying a toll just to breathe. At this point the government should just print crypto and call it a day.
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    Kymberley Sant

    November 15, 2025 AT 19:56
    i dont even know why the court even bothered. if the govt is gonna tax you 30% on every profit and then take 1% just for touching the coin then why even let it exist? its like letting someone drive a car but making them pay for every turn and every breath of air they use
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    Edgerton Trowbridge

    November 17, 2025 AT 09:56
    The Supreme Court’s decision was a necessary check on regulatory overreach, and it should be celebrated as such. However, the absence of a coherent legal framework is now the greatest threat to India’s digital economy. Clarity is not a luxury-it is the foundation of trust. Without it, innovation will continue to flee, talent will migrate, and the government will remain blind to the seismic shifts occurring in global finance. We must not mistake tolerance for progress. The court opened the door; now the legislature must build the house.

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