Crypto held on foreign exchanges or earned from overseas platforms doesn’t sit outside Indian tax law just because the platform isn’t Indian. It usually creates more reporting obligations, not fewer.
Resident Indians are taxed on worldwide income, so gains on crypto held on a foreign exchange are taxed exactly like gains on an Indian one, 30% flat under Section 115BBH, no loss set-off, cost of acquisition as the only deduction. What changes is the reporting layer on top. Foreign crypto holdings and accounts on overseas exchanges generally need disclosure in Schedule FA (Foreign Assets) of your ITR, separate from the Schedule VDA entry for the gain itself. Missing Schedule FA disclosure is treated far more seriously than a routine filing error, it falls under the Black Money Act, with its own penalty and prosecution framework, distinct from ordinary income tax non-compliance.
Cryptocurrency isn’t legal tender in India, and the RBI has repeatedly cautioned banks about facilitating crypto-linked transactions. Cross-border movement of money into or out of crypto exchanges can attract FEMA scrutiny, particularly around how funds are remitted to foreign platforms and how proceeds are brought back. This is a genuinely unsettled area, and it’s one where getting ahead of a question is much easier than answering one after the fact.
If a foreign country also taxes your crypto gains, a Double Taxation Avoidance Agreement with that country may provide relief, but this needs care. Many of India’s treaty partners don’t have specific provisions addressing digital assets, since most DTAAs predate crypto as an asset class entirely. Relief typically gets claimed under general “other income” or capital gains articles, and how well that holds up depends on the specific treaty and the specific transaction.
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