How To Convert Bitcoin And Crypto To Cash In India (2024)

The allure of cryptocurrencies has surged in India, with many investors looking to capitalize on their potential. However, market volatility often prompts investors to convert their digital assets into fiat currency, such as the Indian rupee (INR). Let’s explore the primary methods to achieve this in 2024.

Before diving into the methods, it’s essential to understand:

• Volatility: Cryptocurrencies are notoriously volatile, and their value can fluctuate rapidly.
• Taxation: Any profits from crypto transactions are subject to income tax.
• Security: Safeguarding your crypto assets is paramount.

Can Cryptocurrency Be Converted to Cash?

Yes, cryptocurrency can be converted to cash in India. While the regulatory landscape for cryptocurrencies in India has changed, it is still possible to convert your digital assets into Indian Rupees (INR).

Things to know before you withdraw crypto to a bank account in India include:

• Tax Implications: In India, converting cryptocurrency to cash is subject to a 30% tax on any profits. A 1% TDS (Tax Deducted at Source) is also applicable.
• Time Taken: Depending on the chosen method and the exchange’s processing time, the process can take several days.
• Fees: Cryptocurrency exchanges and other platforms charge fees for withdrawals.
• Market Volatility: The value of cryptocurrency can fluctuate rapidly, impacting the cash you receive.
• Security Risks: Use secure platforms and follow best practices to protect your funds.

Tax on Converting Crypto to Cash

In India, converting cryptocurrency to cash is considered a taxable event. Here’s a breakdown of the taxes involved:

1. Flat Tax of 30%

• Any profit you make from converting your cryptocurrency to cash is subject to a flat 30% income tax.
• This applies regardless of how long you’ve held the cryptocurrency.

2. Tax Deducted at Source (TDS)

• If the value of the crypto transaction exceeds INR 50,000 (or INR 10,000 in some instances), a 1% TDS will be deducted.
• This TDS is usually deducted by the cryptocurrency exchange.

Important Points to Remember

• No indexation benefits: Unlike traditional capital gains, you cannot claim indexation benefits to reduce your tax liability on crypto gains.
• No loss carry forward: Any losses incurred on cryptocurrency transactions cannot be offset against other income or carried forward to future years.

How To Convert Cryptocurrency to Cash in India

There are multiple ways to convert cryptocurrency to cash in India:

1. Crypto Exchanges

• Dominant Method: This is the most common and straightforward way to convert crypto to cash.
• Process:
  • Register with a reputable crypto exchange like WazirX, CoinDCX, or ZebPay.
  • Deposit your cryptocurrency into your exchange wallet.
  • Place a sell order for your desired cryptocurrency.
  • The exchange converts your crypto into Indian rupees (INR).
  • Initiate a withdrawal of the INR to your linked bank account.

• Key Points:
  • Exchange fees apply.
  • Withdrawal times can vary.
  • Security is paramount; choose a reliable exchange.

2. Peer-to-Peer (P2P) Platforms

• Direct Transactions: You can directly sell your crypto to another individual.
• Process:
  • Create an account on a P2P platform like LocalBitcoins.
  • Find a buyer willing to purchase your cryptocurrency.
  • Agree on a price and payment method.
  • Complete the transaction, ensuring security measures are in place.
• Key Points:
  • Potential for better rates compared to exchanges.
  • Higher risk due to dealing with individuals.
  • Requires more effort in finding buyers.

3. Crypto ATMs

• Instant Cash: These machines allow you to convert crypto into cash immediately.
• Process:
  • Locate a Bitcoin ATM near you.
  • Scan a QR code or enter your wallet address.
  • Input the amount of crypto you want to sell.
  • Collect the cash dispensed by the machine.
• Key Points:
  • Limited availability compared to exchanges.
  • Often, it has higher fees and lower exchange rates.
  • Suitable for smaller amounts.

4. Crypto Debit Cards

• Spend Directly: Some crypto platforms offer debit cards linked to your crypto wallet.
• Process:
  • Order a crypto debit card.
  • Load your card with cryptocurrency.
  • Use the card for purchases like any other debit card.
• Key Points:
  • Convenient for daily spending.
  • Cryptocurrency is automatically converted to fiat at the point of sale.
  • Potential fees and exchange rate fluctuations.

How to Manage Risk Before Withdrawing Crypto in India?

• Diversify Your Portfolio: Spread your investments across different cryptocurrencies to reduce risk.
• Dollar-Cost Averaging: Invest a fixed amount of money regularly, regardless of the market price.
• Secure Your Wallet: Protect your cryptocurrency wallet with strong passwords and two-factor authentication (2FA).
• Stay Informed: Keep yourself updated about market trends and news to make informed decisions.
• Consider Your Financial Goals: Determine your investment horizon and risk tolerance before making decisions.
• Beware of Scams: Be cautious of phishing attempts and fraudulent platforms.