Can Businesses in India Accept Crypto Legally? 2026 Rules & Compliance Guide

Can a business in India legally accept Bitcoin, Ethereum, or any other cryptocurrency as payment for goods or services? The short answer is no. But the full picture is far more complex than a simple yes or no. If you're running a business in India and thinking about accepting crypto, you need to understand what’s allowed, what’s not, and what risks you’re stepping into.

What’s Actually Legal?

Cryptocurrency isn’t banned in India. You can buy it, sell it, hold it, and trade it. The Supreme Court lifted the Reserve Bank of India’s banking ban on crypto in 2020, and since then, millions of Indians have invested in digital assets. But there’s a critical difference between owning crypto and using it as payment.

The government doesn’t treat cryptocurrency as legal tender. That means it’s not the same as rupees. You can’t pay your electricity bill, rent, or supermarket bill with Bitcoin - not legally. The Income Tax Department and the Finance Ministry have made this clear: crypto is a Virtual Digital Asset (VDA), not money.

So what can businesses legally do? You can run a crypto exchange, offer trading services, provide blockchain development, or advise on crypto investments. Many Indian startups operate in these spaces. But if you’re a restaurant, a retail store, or a service provider trying to accept crypto as payment for your core product? That’s where you cross the line.

Why Can’t You Accept Crypto as Payment?

The reason is simple: legal recognition. Only the Indian rupee is recognized as legal tender under the Reserve Bank of India Act. Even though crypto transactions are allowed, the government has repeatedly warned against using digital assets for everyday payments.

In 2023, the Finance Ministry released a statement clarifying that while individuals can trade crypto, businesses must not treat it as a currency for transactions. The RBI has also repeatedly stated that crypto poses risks to financial stability and consumer protection. Their stance is clear: if you want to accept payments, use rupees - or the upcoming digital rupee (CBDC), which the central bank is actively testing.

This isn’t just about rules - it’s about practicality. If you accept Bitcoin and the price drops 15% in a day, who absorbs the loss? The business? The customer? The government doesn’t want to deal with that mess. So instead of allowing crypto payments, they’ve created a strict tax and compliance system around crypto as an asset class.

How Crypto Is Taxed (And What It Means for Businesses)

Even if you can’t accept crypto as payment, you can still earn it - through trading, staking, mining, or airdrops. And the government wants its cut.

Since April 2022, all income from Virtual Digital Assets is taxed at a flat 30%, with no deductions allowed except the cost of acquisition. That’s higher than the top income tax slab for most individuals. On top of that, there’s a 4% cess, bringing the total tax rate to 31.2%.

But here’s the catch that affects businesses directly: a 1% Tax Deducted at Source (TDS) applies to every crypto transfer. That means if your business receives crypto from a customer - even if it’s for services rendered - you’re required to deduct 1% as tax and remit it to the government. This rule applies regardless of transaction size.

For example: if you sell a product for 1 ETH worth ₹50,000, you must deduct ₹500 as TDS and deposit it with the tax authorities. You can’t just keep the full ₹50,000. And if you don’t? You’re in violation.

This TDS rule makes accepting crypto as payment practically unworkable for most businesses. You’re not just handling a payment - you’re becoming a tax collector for the government. And if you mess up the reporting, penalties can be steep.

Compliance: KYC, AML, and FIU-IND Registration

If your business is involved in crypto - even if you’re just buying and selling it - you’re now under the same regulatory umbrella as banks.

Since March 2023, all Virtual Digital Asset Service Providers (VDASPs) must register with the Financial Intelligence Unit of India (FIU-IND). This includes crypto exchanges, wallet providers, and any business that facilitates crypto transfers. The registration process requires detailed documentation: business structure, ownership details, KYC procedures, and AML policies.

And compliance isn’t optional. Binance was fined ₹18.82 crore (about $2.17 million) in 2024 for failing to register. Bybit was hit with ₹9.27 crore ($1.07 million). Both companies had to shut down their Indian operations temporarily until they got registered.

For a small business that wants to accept crypto, this means you need:

• A registered business entity (Pvt Ltd, LLP, or OPC)
• A documented KYC process for every customer who sends you crypto
• A system to track every transaction with sender and receiver details
• Monthly reporting to FIU-IND
• Records kept for at least five years

That’s not just paperwork - it’s infrastructure. Most small businesses don’t have the tech or legal team to handle this. It’s designed for large platforms, not local shops.

The Travel Rule: India’s Strictest Crypto Rule

India is one of the few countries that enforces the FATF Travel Rule with no minimum threshold. That means every single crypto transfer - whether it’s ₹100 or ₹10 lakh - must include full sender and receiver information: name, address, ID number, wallet address.

This isn’t just a suggestion. It’s a legal requirement. If you receive crypto without this data, you’re required to reject the transaction. If you accept it anyway, you risk being flagged for money laundering.

For businesses, this makes accepting crypto nearly impossible. Most wallets don’t automatically send this data. Most customers don’t know how to provide it. And most point-of-sale systems can’t capture it. The burden falls entirely on the business to verify, record, and report every single transaction.

What’s Coming Next? The COINS Act 2025

The government is working on the Comprehensive Regulation of Cryptographic Assets (COINS) Act 2025. If passed, this law could change everything.

The draft proposes:

• Formal recognition of crypto as a legal 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

But as of February 2026, the COINS Act is still under review. No timeline has been set for its passage. Until then, businesses must operate under the current patchwork of rules.

Real-World Examples: Who’s Doing It Right?

Some businesses are finding ways to work within the system:

• Crypto exchanges like CoinDCX and ZebPay: They’re fully registered with FIU-IND, enforce KYC, and report TDS. They don’t accept crypto as payment - they facilitate trading.
• Blockchain development firms: They get paid in rupees for building smart contracts or dApps. They might hold crypto as an investment, but never as payment for services rendered.
• International freelancers: Some Indian freelancers receive crypto from overseas clients. They declare it as income, pay 30% tax, and file TDS returns. But they don’t use it to pay their vendors or employees.

None of them accept crypto as payment. They treat it as an investment, not a currency.

What Happens If You Break the Rules?

If you’re a business that accepts crypto as payment:

• You’re violating the legal tender rule
• You’re likely not collecting or depositing TDS
• You’re probably not registering with FIU-IND
• You’re not maintaining KYC records

The consequences? You could face:

• Income tax reassessment with penalties up to 200% of unpaid tax
• FIU-IND investigation for AML violations
• Freezing of your business bank account
• Criminal liability under the Prevention of Money Laundering Act

The government isn’t going after small-time users. But they’ve made it clear: if you’re a business, you’re a target.

What Should You Do Instead?

If you want to accept digital payments, here’s what works:

• Use UPI - it’s fast, free, and legal
• Accept credit/debit cards
• Prepare for the Digital Rupee (e₹) - the RBI’s CBDC is expected to roll out widely in 2026

If you’re interested in crypto, consider these legal paths:

• Invest in crypto as an asset - hold it long-term
• Start a crypto education platform
• Build a blockchain tool for businesses
• Offer crypto trading advisory - get paid in rupees

The door to crypto isn’t closed. It’s just not open for payments.

Final Reality Check

The Indian government doesn’t want to ban crypto. They want to control it. They want to tax it. They want to track every transaction. And they want to keep the rupee as the only real money.

Accepting crypto as payment isn’t just risky - it’s legally unsound. The compliance costs, tax burdens, and regulatory exposure far outweigh any perceived benefits. Even if you think you’re being smart, you’re playing with fire.

The future might change. The COINS Act could bring clarity. But until then, the rule is simple: crypto is an asset, not a currency in India.