If you're in India and thinking about moving your crypto assets overseas, you need to understand one thing upfront: it's not illegal-but it's heavily monitored, heavily taxed, and easily tripped up by paperwork you didn't know existed.
India doesn’t ban crypto. You can buy, sell, hold, and send Bitcoin, Ethereum, or any other coin to another country. But the government treats every transfer like a potential tax evasion scheme. And if you skip a step, you could face penalties, account freezes, or worse.
What Happens When You Send Crypto Out of India?
When you send crypto abroad from India, you're not just sending digital coins. You're triggering a chain of legal, tax, and reporting obligations. The government sees every cross-border crypto transaction as a financial event that needs to be tracked, reported, and taxed.
The key law governing this is the Foreign Exchange Management Act (FEMA). Even though crypto isn’t legal tender, the Finance Ministry officially classified Virtual Digital Assets (VDAs) as "intangible movable property" in June 2025. That means moving crypto overseas is treated like sending money abroad-but with extra layers of scrutiny.
Here’s what you need to know:
- You can send up to $250,000 per year without needing special approval.
- Anything above that requires prior permission from an authorized dealer bank (usually your bank’s forex desk).
- There’s no exception for small transfers-even $100 in crypto counts toward your annual limit.
That $250,000 limit isn’t just a suggestion. The Reserve Bank of India (RBI) requires all exchanges serving Indian users to monitor your total outbound crypto volume. If you hit the limit, your next transfer will be blocked until you submit documentation.
The 30% Tax, 1% TDS, and 18% GST Trap
Taxes on crypto in India are among the highest in the world. And they stack up.
First, there’s the 30% capital gains tax on any profit you make when you sell or transfer crypto. No deductions. No loss offset. If you bought Bitcoin for ₹5 lakh and sent it abroad when it was worth ₹8 lakh, you owe ₹90,000 in tax on the ₹3 lakh gain-even if you never sold it for cash.
Then there’s the 1% Tax Deducted at Source (TDS). Every time you transfer crypto-whether to another wallet, exchange, or person-you’re hit with 1% automatically deducted. This applies to transactions over ₹50,000 in a financial year. So if you send 0.5 BTC worth ₹20 lakh to a friend in the U.S., ₹20,000 gets withheld as tax before the transfer even completes.
And if you’re using an Indian exchange like WazirX or CoinDCX? They also charge 18% GST on every transaction: trades, withdrawals, staking, even NFT sales. That’s not just a tax-it’s a fee on top of a tax on top of a tax.
Put together, a single transfer can easily cost you over 50% in combined taxes and fees. Experts like Dr. Rajeshree Agarwal from the National Institute of Public Finance and Policy have called this "one of the most punitive crypto tax regimes on the planet."
The Travel Rule: India’s No-Threshold Surveillance
Most countries apply the FATF Travel Rule only to transfers over $1,000. India doesn’t. Since February 2025, every single crypto transfer out of India-no matter how small-must include full sender and receiver details.
Exchanges are required to collect and send:
- Full legal name
- Physical address or date of birth
- National ID number (like Aadhaar)
- Wallet or account number
This applies even if you’re sending crypto to your own wallet overseas. If you’re using a non-Indian exchange like Binance or Kraken, they’re legally required to comply-or risk being blocked from serving Indian users. In June 2025, the Enforcement Directorate sent notices to 25 offshore platforms, including Binance and KuCoin, demanding they verify Indian users or lose access.
Result? Many users report delays. One Reddit user, CryptoTravellerIN, said their WazirX account was flagged and frozen for 72 hours because they tried to send 2 BTC to Coinbase without submitting FEMA paperwork.
Reporting Your Foreign Crypto Holdings
Not reporting crypto you hold abroad is one of the riskiest moves you can make.
The Income Tax Department requires all Indian residents to declare foreign crypto holdings in Schedule VDA of their ITR-2 or ITR-3 tax returns. This includes:
- Wallet addresses holding crypto outside India
- Exchange accounts on non-Indian platforms
- NFTs held in foreign wallets
Valuation matters too. The Central Board of Direct Taxes (CBDT) clarified in Circular 18/2025 that crypto must be valued in Indian Rupees at the exact time of transfer, using the RBI’s daily exchange rate. If you transferred ETH on January 15 and it was worth ₹4.2 lakh, that’s the value you report-even if it dropped to ₹3.8 lakh by tax filing season.
Failure to disclose? Penalties can reach 60% of the undisclosed asset value under Section 158B. In some cases, this can lead to criminal prosecution.
What You Need to Do Before Sending Crypto Abroad
If you plan to move crypto out of India, here’s your checklist:
- Link your PAN and Aadhaar to all crypto accounts. This is mandatory since 2023.
- Calculate your annual limit. Track every crypto transfer you make. Don’t assume your exchange does it for you.
- Get your tax calculations right. Use RBI’s daily rate. Keep screenshots of transaction timestamps and values.
- Submit FEMA documentation if you’re near or over $250,000. Contact your bank’s forex department early-processing can take 5-7 days.
- Keep records. Save transaction IDs, wallet addresses, exchange statements, and tax receipts for at least 6 years.
Many users skip steps 3 and 5-and regret it later. The government doesn’t need proof you did something wrong. They just need proof you didn’t report it.
What’s Changing in 2026?
India is preparing for global alignment. By October 2025, it will undergo a Financial Stability Board (FSB) peer review. That means more automatic data sharing with other countries under the Crypto-Asset Reporting Framework (CARF) and updated Common Reporting Standards (CRS).
Expect this:
- Indian exchanges will automatically report crypto holdings to foreign tax authorities
- More banks will freeze accounts for unexplained crypto outflows
- Non-compliant offshore platforms will be blocked from Indian users
Industry analysts at BCG predict only 8-10 crypto exchanges will survive in India by the end of 2026. The rest? They couldn’t afford the compliance costs.
Meanwhile, peer-to-peer (P2P) trading is rising. In the first half of 2025, P2P volumes jumped 28% as users tried to bypass exchange restrictions. But even P2P transfers are now monitored through bank transaction patterns. If you’re paying someone in INR to receive crypto, your bank may flag it as suspicious.
What Happens If You Don’t Follow the Rules?
People think, "I’ll just send it to a friend’s wallet and never tell anyone." But here’s what actually happens:
- Your exchange freezes your account for 30-90 days
- You get a notice from FIU-IND (Financial Intelligence Unit-India)
- Your bank blocks future forex transactions
- You’re audited for the past 6 years
- You pay 60% of the asset value as a penalty
There’s no gray area. The government doesn’t need to prove you were trying to evade taxes. They just need to prove you didn’t report it.
One user in Bengaluru had 12 ETH seized after a routine audit. They didn’t file Schedule VDA. The tax department valued the ETH at ₹84 lakh at the time of transfer. The penalty? ₹50.4 lakh. They’re still appealing.
Final Reality Check
India has the largest crypto user base in the world-over 107 million people. But it also has one of the strictest regulatory environments. The government isn’t trying to stop crypto. It’s trying to control it.
If you’re moving crypto abroad:
- Don’t assume your exchange will protect you
- Don’t rely on advice from Reddit or Telegram groups
- Don’t delay documentation
- Don’t underestimate the tax burden
The system is designed to make compliance easy for those who follow the rules-and punishing for those who don’t.
There’s no shortcut. No loophole. No secret way around it.
If you want to move crypto abroad from India, do it right-or don’t do it at all.
Can I send crypto abroad without using an exchange?
Yes, you can send crypto directly from your wallet to another wallet overseas using a private key or QR code. But that doesn’t exempt you from reporting. The Indian government tracks crypto transfers through blockchain analytics and bank transaction patterns. Even if you use a non-Indian exchange or a peer-to-peer platform, you’re still required to report the transfer under FEMA and disclose it in your tax return. Ignoring this doesn’t make it disappear-it just makes you a target for audit.
What if I move crypto to a friend’s wallet abroad?
Sending crypto to a friend’s wallet still counts as a taxable event. If you’re transferring it as a gift, you still owe 30% capital gains tax on the profit you made since buying it. The 1% TDS still applies. And you must report it in Schedule VDA. The Indian tax department treats crypto transfers as income, not gifts. Even if your friend doesn’t report it, you’re still liable.
Is there a legal way to avoid the 30% tax?
No. There is no legal way to avoid the 30% capital gains tax on crypto profits in India. Unlike stocks or real estate, crypto losses cannot offset gains. Even if you bought at ₹10 lakh and sold at ₹8 lakh, you still owe tax on the ₹2 lakh loss? No-you don’t owe tax on a loss, but you also can’t use that loss to reduce tax on other crypto gains. The tax system is designed to be non-negotiable. The only way to reduce your tax burden is to hold longer than one year, but even then, the 30% rate applies regardless of holding period.
Can I use a foreign bank account to receive crypto from India?
Yes, you can receive crypto in a foreign bank account-but only if you have proper documentation. If your foreign account is linked to crypto transfers, your Indian bank may freeze your domestic accounts. The RBI and FIU-IND monitor cross-border crypto flows. If you don’t declare the source of funds in your foreign account, you risk being flagged for money laundering. The safest path is to declare the transfer as a VDA movement under FEMA and file Schedule VDA with your tax return.
What happens if I don’t report crypto I moved abroad last year?
If you didn’t report crypto moved abroad in a previous year, you’re at risk of a tax audit. The government now automatically receives data from international exchanges and foreign tax authorities under CARF and CRS. If you’re audited, you’ll be asked to prove the source of funds in your foreign wallet. If you can’t, you’ll be hit with a 60% penalty on the undisclosed value, plus interest and possible criminal charges. The best move? File a revised return now. Voluntary disclosure reduces penalties significantly.
For those considering moving crypto out of India, the message is clear: transparency isn’t optional. It’s the only path that keeps you safe.
John Doyle
February 11, 2026 AT 21:51Man, I just moved 3 BTC to my Ledger last week and thought I was being smart. Turns out I forgot about the 1% TDS and didn’t even realize my exchange was auto-deducting it. Now I’m stuck with a 12k INR tax bill I didn’t budget for. Don’t assume your wallet app has your back - they’re just following orders.