Moving Crypto Assets Abroad from India: Legal Rules and Tax Risks in 2026

If you're in India and thinking about moving your crypto assets overseas, you need to know this: it's not just a technical move. It's a legal minefield. The Indian government has built a web of rules so tight that even small transfers can trigger audits, fines, or worse. And it's not about stopping crypto-it's about controlling it. Every step you take outside India’s borders now leaves a digital trail the tax authorities are watching closely.

What Happens When You Send Crypto Out of India?

Sending Bitcoin, Ethereum, or any other crypto from an Indian wallet to an exchange in the U.S., Singapore, or UAE isn't treated like sending money to a friend. Under India’s 2025 rules, it’s classified as a Virtual Digital Asset (VDA) transfer under the Income Tax Act. That means it’s subject to strict reporting, heavy taxes, and mandatory disclosures you can’t ignore.

The Reserve Bank of India (RBI) treats these transfers as current account transactions under the Foreign Exchange Management Act (FEMA). That’s unusual-most countries classify crypto as capital assets. But in India, even if you’re just moving your own coins to a personal wallet abroad, you’re still under financial surveillance.

You can’t bypass this by using peer-to-peer (P2P) platforms like LocalBitcoins or Paxful. The Financial Intelligence Unit-India (FIU-IND) now requires all crypto exchanges serving Indian users-whether based in India or overseas-to report every transaction. That includes Binance, Bybit, and KuCoin. If you’re an Indian resident, your activity is tracked regardless of where the exchange is headquartered.

The 30% Tax That Doesn’t Care About Losses

Here’s the kicker: India taxes crypto profits at a flat 30%. No deductions. No loss offsets. If you bought Bitcoin for ₹5 lakh and sold it for ₹8 lakh, you owe ₹90,000 in taxes-even if you lost ₹2 lakh on another trade that same year. This rule applies whether you’re selling inside India or moving the asset abroad.

On top of that, a 1% Tax Deducted at Source (TDS) kicks in on every transaction over ₹50,000 in a financial year. So if you transfer 0.5 BTC worth ₹3 lakh to a foreign wallet, ₹3,000 gets automatically withheld as tax. And if you’re using a local exchange like WazirX or CoinDCX to send crypto out, they’ll deduct it before the transfer even goes through.

Worse, some exchanges now add an 18% Goods and Services Tax (GST) on withdrawals, staking, and even margin trades. That’s not just tax on profit-it’s tax on the movement itself. You’re paying tax just for changing wallets.

You Must Disclose Foreign Crypto Holdings

The Income Tax Department doesn’t just want to know what you earned-they want to know where it is. All Indian residents must declare foreign crypto holdings in Schedule VDA of their ITR-2 or ITR-3 tax returns. This isn’t optional. Failing to report means you’re subject to a 60% penalty on the undisclosed value under Section 158B of the Income Tax Act.

Let’s say you moved 10 ETH worth ₹25 lakh to a wallet in Singapore and didn’t report it. If the tax department finds out, you could owe ₹15 lakh in penalties alone-not even counting the original 30% tax. And this isn’t theoretical. In 2025, the CBDT sent out over 12,000 notices to individuals suspected of undeclared crypto holdings abroad.

The valuation rules are strict too. You must report the value of your crypto in Indian Rupees at the exact time of transfer, using the RBI’s published exchange rate. If you transferred on a Friday and the rate changed by Monday, you can’t use the Monday rate. The system records the timestamp of the blockchain transaction and matches it to the RBI’s daily rate.

FEMA Limits: The 0,000 Cap

Under FEMA regulations, Indian residents need prior approval from an authorized dealer bank (like HDFC or ICICI) to send more than $250,000 in crypto abroad per year. This applies to all virtual assets treated as “intangible movable property.”

That limit isn’t just a suggestion. In June 2025, the Enforcement Directorate froze accounts of three Indian traders who tried to move $310,000 in crypto without approval. One of them had split the transfer across three wallets to avoid detection. It didn’t work. Blockchain analytics firms like Chainalysis flagged the pattern, and the FIU-IND traced all transactions back to the same PAN.

Even if you’re under the limit, you still need to maintain records: wallet addresses, timestamps, exchange statements, and proof of origin. The RBI’s KYC 2025 directive requires exchanges to keep these for at least five years-and hand them over on request.

The Travel Rule: No Minimum, No Exceptions

India is the only country in the world that applies the FATF Travel Rule to every crypto transaction, no matter how small. In most places, you only need to share sender and receiver details if the transfer is over $1,000. In India, even sending ₹100 worth of Dogecoin to a friend overseas triggers full disclosure.

Exchanges must collect and transmit:

• Full legal name
• Physical address or date of birth
• Account number or wallet ID
• National ID number (PAN or Aadhaar)

This data is shared with FIU-IND and foreign regulators. If you’re using a non-compliant platform-say, a decentralized exchange that doesn’t ask for ID-you’re still at risk. The government has already blocked 12 offshore platforms for failing to comply, and more are on the list.

What Happens If You Get Caught?

The penalties aren’t just financial-they’re personal. The Enforcement Directorate has started linking crypto violations to money laundering cases under the Prevention of Money Laundering Act (PMLA). That means:

• Accounts can be frozen without warning
• Assets can be seized
• Criminal prosecution is possible for repeat or large-scale violations

A user on Reddit reported that WazirX froze their account after they tried to move 2 BTC to Coinbase. They were asked to submit FEMA documents within 72 hours-or face permanent suspension. That’s not an isolated case. A July 2025 survey by CryptoWire found that 68% of Indian users experienced transaction freezes during cross-border transfers.

And the system is getting smarter. The Indian Computer Emergency Response Team (CERT-In) now requires all exchanges to pass cybersecurity audits focused on cross-border transaction monitoring. If your wallet provider fails, they’ll be barred from serving Indian users.

Who’s Affected the Most?

It’s not just traders. Investors, miners, and even NFT collectors are caught in this net. If you hold NFTs bought with crypto and later transfer them abroad, they’re now classified as VDAs. That means they’re taxable. That means they’re reportable. That means they’re traceable.

The data shows it’s working-for the government, at least. Cross-border crypto outflows from India dropped 32% in the first half of 2025, while global volumes rose 15%. But the real story is underground: P2P trading volume jumped 28% as users turned to cash-based, in-person trades to avoid detection.

Experts warn this isn’t sustainable. Dr. Rajeshree Agarwal of the National Institute of Public Finance and Policy says India’s system-30% tax + 1% TDS + 18% GST + 60% penalty-creates an effective tax burden of over 50% on many transactions. That’s higher than Nigeria or Pakistan.

What Should You Do Now?

If you’re thinking of moving crypto out of India:

1. Calculate your total crypto value across all wallets. Include staking rewards and NFTs.
2. Use the RBI’s historical exchange rates to value each transfer at the exact time it happened.
3. File Schedule VDA in your ITR before the July 31 deadline.
4. If transferring over $250,000, contact your bank’s authorized dealer for FEMA approval-start early, it takes weeks.
5. Only use exchanges registered with FIU-IND. Check the official list on the FIU-IND website.
6. Keep records of every transaction: screenshots, transaction IDs, wallet addresses, and exchange confirmations.

There’s no legal loophole. No gray area. The rules are clear, and enforcement is aggressive. Trying to hide your crypto abroad isn’t just risky-it’s likely to backfire.

What’s Next?

The government plans to introduce comprehensive crypto legislation in the Winter Session of Parliament 2025. But Finance Minister Nirmala Sitharaman has made it clear: crypto won’t become legal tender. The goal isn’t to ban it-it’s to control it, tax it, and monitor it.

The next big change? India is preparing to join the Crypto-Asset Reporting Framework (CARF), which will automatically share crypto transaction data with over 100 countries. By 2026, your foreign holdings won’t just be reported-they’ll be known.

The message is simple: if you move crypto out of India, the government will know. And they’ll expect you to pay.