Moving Crypto Assets Abroad from India: Legal Rules You Must Know in 2026

Every year, over 100 million Indians hold cryptocurrency-but moving it overseas isn’t as simple as sending a wire. If you’re thinking about transferring Bitcoin, Ethereum, or any other digital asset out of India, you’re stepping into one of the strictest crypto regulatory environments in the world. There’s no ban on owning crypto. But moving it abroad? That’s where things get complicated, expensive, and risky.

What’s Legal? What’s Not?

Cryptocurrencies are legal to own and trade in India, but they’re not legal tender. The government calls them Virtual Digital Assets (VDAs), and they’re treated like property-not money-for tax and foreign exchange purposes. That distinction changes everything.

You can buy crypto on Indian exchanges like WazirX, CoinDCX, or ZebPay. You can hold it. You can even sell it. But when you try to send it to a wallet or exchange outside India, you trigger multiple layers of regulation: tax, foreign exchange, anti-money laundering, and cybersecurity rules-all at once.

The Tax Trap: 30% + 1% + 18% = Over 50% in Costs

The biggest surprise for most people? You pay tax on every crypto transfer-even if you’re just moving it to your own wallet abroad.

- 30% capital gains tax: You pay this on any profit you made from buying crypto, no matter how long you held it. No loss offsetting. If you bought Bitcoin at ₹30 lakh and now it’s worth ₹40 lakh, you owe ₹3 lakh in tax on the ₹10 lakh gain-even if you’re just moving it overseas.

- 1% TDS (Tax Deducted at Source): Every time you transfer crypto (buy, sell, swap, or send), the exchange withholds 1% of the transaction value if it’s over ₹50,000 in a financial year. That’s on top of the 30%. So sending ₹5 lakh worth of ETH? ₹5,000 gets taken before you even hit send.

- 18% GST: Applied to every crypto transaction on Indian platforms-including withdrawals. That means if you’re moving crypto out of WazirX or CoinSwitch, you’re paying GST on the transfer itself. This isn’t a one-time fee. It’s charged every time.

Add those up, and for a ₹10 lakh transfer, you could be paying over ₹5.3 lakh in taxes and fees before you even get the crypto out of India. That’s not a cost of doing business. That’s a penalty for trying to move assets legally.

FEMA Rules: The Foreign Exchange Minefield

The Reserve Bank of India (RBI) controls all cross-border money flows under the Foreign Exchange Management Act (FEMA). And since 2025, VDAs are officially classified as intangible movable property under FEMA.

That means:

- You need prior approval from an authorized dealer bank (like SBI or HDFC) if you’re sending more than $250,000 worth of crypto per year. No exceptions. No loopholes.

- You must prove the source of funds. If you bought crypto with rupees from your salary, you need bank statements. If you earned it through mining or staking, you need proof of income. The RBI doesn’t accept “I mined it on my laptop” as valid.

- You must file Schedule VDA in your income tax return. If you hold crypto overseas, you must declare it. Failure to disclose? You could face a 60% penalty on the undisclosed value, plus criminal charges under Section 158B of the Income Tax Act.

Most people don’t realize this: even if you’re sending crypto to your own wallet in the U.S. or Singapore, the Indian government still treats it as a foreign asset transfer. You’re not just moving data. You’re moving value across borders-and the system is watching.

The Travel Rule: Every Transaction Is Tracked

India is one of the only countries in the world that applies the FATF Travel Rule to every crypto transaction, no matter how small. That means:

- Every time you send crypto abroad, your exchange must collect and send your full name, address, PAN, Aadhaar number, and wallet address to the recipient’s platform.

- The recipient platform must verify your identity before accepting the transfer.

- If the foreign exchange doesn’t comply (like KuCoin or Bybit), Indian exchanges are required to block the transfer.

This isn’t just about anti-money laundering. It’s about control. The government wants to know exactly where your crypto goes-and who gets it. That’s why platforms like WazirX and CoinDCX now freeze accounts if you try to send crypto to unregistered foreign wallets.

A Reddit user in Mumbai reported in August 2025 that WazirX froze his account after he tried to send 2 BTC to Coinbase Pro. He was given 72 hours to submit FEMA compliance documents-or lose access to his entire portfolio. He didn’t have them. He lost the funds.

What Happens If You Don’t Comply?

The Enforcement Directorate (ED) isn’t just sending warnings. They’re making arrests.

In June 2025, the ED issued notices to 25 offshore exchanges-including Binance, KuCoin, and Bybit-demanding they comply with Indian KYC rules for Indian users. Non-compliant platforms were threatened with blocking. Some already are.

If you try to bypass the system:

- You could be flagged for money laundering.

- Your bank account could be frozen.

- Your crypto could be seized.

- You could face criminal prosecution.

Even if you use P2P platforms like LocalBitcoins or Paxful, the FIU-IND (Financial Intelligence Unit) monitors those transactions. Any transfer over ₹10 lakh ($12,000) must be reported within 24 hours. That’s not a suggestion. It’s the law.

Real People, Real Problems

A CryptoWire survey of 1,247 Indian crypto users in July 2025 found:

- 68% had their cross-border transfers frozen or delayed.

- 42% waited more than 7 days for approval.

- 57% couldn’t get bank certification for FEMA compliance.

- 49% struggled to value their crypto for tax purposes because exchange rates changed during the transfer window.

One user from Bangalore tried to send $50,000 worth of ETH to a Swiss wallet. He spent three weeks gathering documents: bank statements, tax filings, PAN-Aadhaar links, and a letter from his bank. He submitted everything. The transfer was blocked anyway because the receiving wallet hadn’t registered with FIU-IND.

What Are Your Options?

There’s no easy way out. But here’s what works:

• Use only RBI-approved Indian exchanges that have partnered with authorized dealer banks. These platforms handle FEMA compliance for you.
• Keep records of every transaction: buy price, sell price, date, wallet addresses, and exchange rates. Use a crypto tax tool like Koinly or CoinTracker with Indian tax rules enabled.
• Don’t send to unregistered wallets. Even if it’s your own, if it’s on an unregistered platform, it’s a red flag.
• Stay under $250,000/year to avoid the need for prior approval.
• Declare everything. If you don’t, the government will find it anyway-through blockchain analytics, bank reports, or international tax sharing (CARF/CRS).

What’s Coming in 2026?

India is preparing for the Financial Stability Board’s peer review in October 2025. That means more alignment with global standards. Expect:

- Automatic exchange of crypto tax data with over 100 countries via CARF.

- New legislation possibly introduced in the Winter Session of Parliament.

- More banks cutting off crypto-related transactions.

But don’t expect liberalization. Finance Minister Nirmala Sitharaman has said repeatedly: “Cryptocurrencies cannot be a legal currency in India.” That’s not a temporary stance. It’s policy.

The future of crypto in India isn’t about freedom. It’s about control. And the government is building the infrastructure to monitor every single transfer.

Bottom Line

Moving crypto out of India isn’t illegal-but it’s heavily regulated, heavily taxed, and heavily monitored. If you do it without understanding the rules, you’re not being clever. You’re risking your money, your account, and your legal standing.

The smart move? Don’t try to outsmart the system. Work within it. Keep records. Pay your taxes. Declare your holdings. Use only compliant platforms. And if you’re unsure? Talk to a tax advisor who knows Indian crypto law. Because in 2026, ignorance isn’t an excuse. It’s a liability.