Bitcoin crossed the $123,000 mark for the first time on Monday. The world's largest cryptocurrency scaled a record high of $122,571.19, before pulling back slightly to last trade 3 per cent higher at $121,488.08.
Blame it on the massive rally, according to a Coinswitch report, over two crore crypto investors were recorded in India as of December last year.
Sample this: the closing price of Bitcoin in July 2020 was about ₹8.7 lakh per BTC, and the current price is ₹1.05 crore per BTC. If you had invested ₹1 lakh in Bitcoin, your investment would have grown to more than ₹12 lakh.
What's fueling the rally?
According to Raj Karkara, COO of Zebpay, Bitcoin’s 2025 rally is being driven by a powerful mix of institutional adoption, regulatory progress, and favourable macroeconomic trends. Major asset managers like BlackRock, Fidelity, Invesco, and Franklin Templeton are allocating significant capital to spot Bitcoin ETFs, positioning BTC as a core part of diversified investment strategies," Karkara said.
Karkara feels that the regulatory clarity, typically in the US, is also boosting the positive sentiment. “Regulatory clarity is also playing a key role, especially in the US, where developments like the GENIUS Act, improved custody frameworks, and state-led treasury initiatives are strengthening the overall investment environment,” he explained.
If you are a crypto investor and looking to book gains, here's a complete low-down:
How to book cryptocurrency gains in India
Redeeming your bitcoin or cryptocurrency gains is largely a two-step process, and you can do so through a Financial Intelligence Unit (FIU)-registered exchange. To name a few, ZebPay, CoinDCX, WazirX, and CoinSwitch are FIU-registered. “To redeem Bitcoin profits in India, investors must sell their BTC holdings on an FIU-registered exchange like ZebPay by converting them into Indian Rupees (INR),” Karkara said.
Step 1: Sell your crypto assets—Log in to a crypto exchange, go to the trading section, select an asset like Bitcoin, Ethereum, Doge coin, etc., and sell it for INR. Your account should be KYC compliant. The proceeds will be credited to your wallet on the exchange.
Step 2: Withdraw INR to your bank account— Once you see the proceeds in your wallet on the exchange, go to the withdraw/payout section, select your bank account, enter the amount and complete the transaction. The funds will be credited to your bank account.
“A 1 per cent Tax Deducted at Source (TDS) is applied at the time of sale, and the net proceeds are credited to the investor’s account. Once the transaction is complete, the funds can be withdrawn directly to a linked bank account and used like any regular balance,” Karkara added.
How to report crypto gains in ITR, and which form is applicable?
In India, cryptocurrencies are classified as virtual digital assets (VDAs), and the profit earned from such investments is taxable. “Profits from the sale of cryptocurrencies are taxed at a flat rate of 30 per cent. No basic exemption limit or benefit of tax slabs is available. Only the cost of acquisition is allowed as a deduction—no other expenses or losses can be set off or carried forward," said Abhishek Soni, CEO of Tax2win.
The Indian government had clarified its official stance on cryptocurrencies and other VDAs in the 2022 Union Budget. While filing the income tax return, crypto gains must be reported under the VDA schedule. “Taxpayers earning crypto income should use ITR-2 if they are salaried or pensioners. Those having business or professional income along with crypto gains should file ITR-3,” Soni added.
Word of caution
Looking at the rally and past returns, cryptocurrencies may seem like a great investment option, but this space is unregulated. Unlike capital market products like mutual funds or equities, which are regulated by the Securities and Exchange Board of India (SEBI), there's no watchdog for cryptocurrencies. Earlier in May, the Supreme Court had also urged the government to formulate a ‘clear cut’ policy on regulating cryptocurrency while underlining its impact on economy.
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