USDT in India: buying, selling, the INR premium and tax
What USDT is, why it often trades above the dollar rate in India, how to buy and sell it safely, which network to use, and how USDT is taxed.
- Checked against the rules: Oct 2026
- Sources cited · No buy or sell calls
USDT, also called Tether, is the most traded crypto asset in the world, and one of the most searched in India. Here's what Indian users need to know.
What is USDT?
USDT is a stablecoin: a token designed to hold a steady value of $1. Tether, the company behind it, says each USDT is backed by reserves, mostly US Treasury bills and cash equivalents, and publishes regular attestations. Traders use USDT to move between coins without returning to rupees, to access DeFi, and to send value across borders.
Why USDT costs more than the dollar rate in India
You'll often see USDT priced on Indian exchanges a few percent above the official USD/INR rate. Reasons include:
- strong demand from Indians wanting dollar exposure,
- limited, costly ways to move rupees onto and off crypto platforms, and
- the 1% TDS and 30% tax, which raise the cost of trading.
The premium changes over time and can disappear. If you buy at a high premium and sell when it narrows, you lose money even though USDT itself held $1. Check live USDT prices in INR.
How to buy and sell USDT safely
- Use an FIU-registered exchange's INR market. See how to choose a crypto exchange.
- Avoid P2P sales to strangers. USDT is the coin most often involved in bank account freezes.
- Beware of "USDT investment" schemes promising fixed daily returns. They are common scams.
- Avoid face-to-face cash deals. Besides robbery and counterfeit-note risks, receiving ₹2 lakh or more in cash in a single transaction or day breaks the Income Tax Act's cash limit, and cash with no paper trail is hard to explain in a tax notice.
- Compare the buy and sell price. On some platforms the gap between them is several percent, which you lose on every round trip.
Which network should you use?
USDT exists on several blockchains. When you withdraw or deposit, the network must match on both sides:
| Network | Often called | Typical use |
|---|---|---|
| Tron | TRC-20 | Low fees, popular for transfers |
| Ethereum | ERC-20 | DeFi on Ethereum, higher fees |
| BNB Chain | BEP-20 | Low fees, BNB ecosystem |
| Solana | SPL | Fast and cheap, Solana DeFi |
Sending on the wrong network can mean losing the funds. Always send a small test first.
How USDT is taxed
USDT is a virtual digital asset, so:
- Selling USDT for rupees is taxed at 30% plus cess on any gain, including gains from the INR premium.
- Swapping USDT for another coin, or another coin for USDT, is a taxable transfer.
- 1% TDS applies on sales above the threshold on Indian exchanges.
- Losses, for example when the premium shrinks, can't be set off.
Work it out with the crypto tax calculator, and see the crypto tax guide.
Risks to understand
- Issuer risk: USDT's value depends on Tether's reserves and operations.
- Freezes: Tether can freeze USDT at addresses linked to crime.
- Regulation: the RBI has been particularly cautious about privately issued stablecoins.
- Premium risk: the INR premium can move against you.
Frequently asked questions
Is USDT legal in India?
Holding and trading USDT is legal, like other crypto. See is crypto legal in India?
Is USDT a safe way to save in dollars?
It carries risks a bank deposit doesn't, and gains in rupee terms are taxed at 30%. It isn't a substitute for regulated savings.
Can I earn interest on USDT?
Some platforms and DeFi protocols offer yield on USDT. That income is taxable and carries extra risk. See staking and DeFi income tax.
Sources
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