Can I Legally Buy USDT in India?

If you’re dabbling in crypto investing, you’ve likely come across USDT (Tether)—a stablecoin designed to mimic the value of the US Dollar. It’s widely used for trading, storing value, and protecting your portfolio from market swings. But given India’s cautious stance on crypto, one burning question remains: Can you legally buy USDT in India? The short answer is yes, but there’s more to it. 

In this guide, we’ll break down the legal clarity around USDT in India, how to buy it safely, taxation rules, where to store it, and why choosing the right platform matters.

Key Takeaways:

  • USDT is legal to buy and hold in India, though it’s not recognized as an official currency.
  • Transactions are legal if done through KYC-compliant platforms.
  • You can buy USDT directly with INR via exchanges like Mudrex.
  • Crypto gains, including those from USDT, are taxed at a flat 30% rate in India.
  • P2P methods exist but come with legal ambiguity and security risks.

What Is USDT (Tether)?

USDT, or Tether, is a stablecoin—a type of cryptocurrency that maintains a stable value by being pegged to a reserve asset, typically a fiat currency like the US Dollar. In USDT’s case, every token is intended to represent 1 USD. Here is why investors use USDT:

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  • Stability: USDT helps shield your portfolio from crypto volatility.
  • Liquidity: It’s accepted across almost all crypto exchanges, making it easy to trade.
  • Speed: It enables faster cross-border transactions compared to traditional banking systems.
  • Bridge Asset: Traders often move funds into USDT during market downturns to avoid losses and jump back in when the market recovers.

USDT currently ranks among the top 3 cryptocurrencies by market capitalization, trailing only Bitcoin and Ethereum, and processes billions of dollars in daily volume.

ALSO READ: What Are Stablecoins? What Are Its Different Types and Their Benefits

Is It Legal to Buy USDT in India?

Yes— buying USDT in India is legal. But it’s important to understand the nuance. India does not yet have a specific regulatory framework that legalizes or prohibits cryptocurrencies like USDT. What it does have is a tax regime, guidelines for KYC, and regulatory oversight via existing laws like FEMA (Foreign Exchange Management Act). In essence:

  • You can legally buy, hold, and sell USDT in India.
  • However, it’s not legal tender, meaning you can’t use it to pay for groceries or rent.

The Reserve Bank of India (RBI) has been cautious about crypto but hasn’t banned it. The Supreme Court struck down the RBI’s banking ban in 2020, reopening access to crypto. Since then, the government has focused on regulating crypto through taxation and compliance rather than prohibition.

How Can You Legally Buy USDT in India?

In India, the legality of buying USDT hinges largely on where and how you buy it. The safest and most compliant route is to use a regulated, KYC-compliant platform like Mudrex. These platforms are aligned with existing laws, including those governed by FEMA and the Income Tax Act. 

If you’re ready to buy USDT but aren’t sure where to start, you’re not alone. For new investors, the buying process may seem intimidating, but with platforms like Mudrex, it’s easy. Mudrex has built an intuitive interface that caters specifically to Indian investors, ensuring full compliance with local laws and financial regulations. Here’s a detailed breakdown of how you can buy USDT legally and securely:

  • Sign Up for an Account: Go to Mudrex.com or download the Mudrex app. Sign up using your email ID or phone number.
  • Verify Your Identity (KYC): Complete KYC by submitting a PAN card, Aadhaar, or other government-issued documents. This is mandatory for legality and safety.
    Add INR to Your Wallet: Use UPI, net banking, or bank transfer to fund your Mudrex wallet in INR. Your funds are stored in a secure INR wallet linked to your account.
  • Search for USDT: Head to the USDT token page. Enter the amount of INR you want to convert into USDT.
  • Confirm and Buy: Review the exchange rate, fees, and click “Buy Now.” Your USDT will be credited to your Mudrex crypto wallet.
  • Secure Your USDT: You can either hold your USDT on the platform or transfer it to an external wallet for long-term storage.

You can also join the Mudrex Telegram Community for updates, support, and news regarding crypto.

ALSO READ: How to Buy Tether in India?

What Makes the Transaction Legal?

Your transaction is considered legal in India when the following conditions are met:

  • KYC Compliance: Verifying your identity is mandatory and prevents fraud.
  • FEMA Guidelines: As per FEMA, foreign assets, including crypto, must be acquired via permitted channels. Buying through Indian platforms that follow RBI norms ensures compliance.
  • Tax Filing: Declaring crypto profits in your ITR aligns your transactions with Indian tax laws.

Buying USDT through P2P or foreign exchanges without KYC may fall into a legal gray area, which we’ll cover later.

How Is USDT Taxed in India?

USDT, like all cryptocurrencies, is taxed under India’s current crypto tax regime, announced in 2022. The Income Tax Act now includes provisions for Virtual Digital Assets (VDAs), a category under which USDT falls. Here’s how it works:

  • Flat 30% Tax on Gains: If you sell USDT for INR or another crypto at a higher price than you bought it, the profit is taxed at 30% flat, with no deductions except acquisition cost.
  • 1% TDS (Tax Deducted at Source): If your total crypto trades exceed ₹10,000 in a financial year, a 1% TDS will be deducted at the time of sale.
  • No Loss Set-Off: Losses from USDT or other crypto trades cannot be set off against any other gains, be it stock, property, or business income.

Here is an example for your understanding:

  • Buy USDT worth ₹50,000
  • Sell for ₹60,000
  • Profit: ₹10,000
  • Tax payable: ₹3,000 (30% of ₹10,000)
  • TDS deducted: ₹600 (1% of ₹60,000 at the time of sale)

Where Should You Store USDT After Buying?

Once you buy USDT, the next step is to store it securely. Here are some storage options:

Storage TypeBest ForRisk LevelExample Tools
Exchange WalletActive tradingMediumMudrex, Binance
Hot WalletRegular transfers & paymentsMediumMetaMask, Trust Wallet
Cold WalletLong-term secure storageLowLedger, Trezor

Pro Tip: For large holdings or long-term savings, transfer USDT to a cold wallet to avoid online threats.

Is P2P USDT Buying Legal in India?

Peer-to-peer (P2P) crypto trading is not illegal, but it operates in a regulatory gray zone. Here’s what you need to know:

  • Lack of KYC Controls: Most P2P platforms do not enforce strict KYC.
  • No Regulatory Oversight: Transactions often bypass standard compliance procedures.
  • High Risk of Fraud: P2P transactions can lead to scams or disputes with no formal resolution.

While platforms like Binance and WazirX offer P2P features, the safer choice is always to go through regulated platforms like Mudrex that ensure transparency, compliance, and fund security.

Conclusion

The bottom line? Buying USDT in India is legal, as long as you do it the right way. While India doesn’t recognize crypto as official currency, it has established a framework for its taxation and regulation. By choosing a compliant platform like Mudrex, verifying your identity, and keeping accurate records for taxation, you can confidently participate in the crypto ecosystem without breaking any laws.

As global and local crypto policies evolve, staying informed and compliant will be your biggest advantage. Whether you’re using USDT as a hedge against market volatility or as a tool for efficient trading, ensure that every step you take is aligned with India’s legal and regulatory norms.

FAQs

Is USDT banned in India?

USDT is not banned. It’s legal to buy and sell as long as you follow compliance protocols and tax guidelines.

Can I buy USDT with INR?

Platforms like Mudrex allow direct purchases of USDT using Indian Rupees via UPI, bank transfers, or net banking.

Do I need to report USDT holdings in my ITR?

Any gains from selling USDT must be reported under capital gains in your Income Tax Return.

Is it safe to hold USDT on an exchange?

It’s safe for short-term holding, especially on regulated platforms. For long-term storage, consider a hardware (cold) wallet.

Are there any limits on how much USDT I can buy in India?

There are no hard limits from the government, but exchanges may have internal limits for KYC-unverified users or specific funding sources.

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