How to Buy Crypto in India Safely: A Step-by-Step Checklist
Buying crypto in India is legal, and the process is much like opening a trading account. Most problems come from using the wrong platform, falling for scams, or not keeping records for tax. Here's a simple checklist.
1. Use an exchange registered with FIU-IND
Crypto exchanges serving Indian users must register with the Financial Intelligence Unit – India (FIU-IND) under anti-money-laundering rules. A registered exchange follows KYC rules, deducts TDS correctly, and gives you the reports you need for tax. Before you sign up, check that the platform says it's FIU-registered. Be wary of apps that don't ask for KYC at all.
2. Complete KYC
You'll usually need your PAN, Aadhaar and a bank account in your name. Your PAN matters for tax, because TDS on your sales is linked to it.
3. Add rupees the official way
Deposit INR by UPI or bank transfer through the exchange's own payment options. Be careful with peer-to-peer (P2P) trades with strangers. Payments from unknown sources have led to bank accounts being frozen.
4. Check the real cost before you buy
- Trading fee: often a small percentage per trade.
- Spread: "instant buy" prices can be higher than the market price. Compare with the live BTC to INR rate.
- Withdrawal fees if you move coins out.
5. Start small and consider a SIP
Crypto is volatile. Many people start with an amount they're fully prepared to lose, and buy in monthly instalments instead of all at once. See SIP vs lump sum and the SIP calculator.
6. Avoid the most common scams
- "Guaranteed" or very high fixed returns, often promoted on Telegram or WhatsApp.
- People who contact you first offering to "manage" your crypto or help you recover lost funds.
- Fake apps and websites that copy a real exchange's name. Download apps only from official stores and check the developer.
- Anyone asking for your password, OTP or wallet recovery phrase. No genuine service will ever ask for these.
7. Keep your coins safe
Turn on two-factor authentication, using an authenticator app rather than SMS if you can. If you move coins to your own wallet, write down the recovery phrase on paper and keep it offline. Anyone with that phrase controls your coins.
8. Keep records for tax
Download your trade history at the end of each financial year. You'll need every buy and sell to report your profit in the VDA schedule of your ITR. See the crypto tax guide and the tax calculator.
Crypto products are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. This guide is general information, not financial advice.