Is Binance legal in India? Registration, tax and P2P risks in 2026
Is Binance legal in India? Its FIU-IND registration and ₹18.82 crore penalty, how Indians use it, P2P bank freeze risks, TDS, and what the 2026 hack means.
Binance is the world's largest crypto exchange, and many Indians use it for its range of coins and low trading fees. But its history in India has had a ban, a block and a fine, and many people still aren't sure whether using it is legal. Here's the current position, what changed and the risks specific to Indian users.
The short answer
Yes, using Binance is legal in India. Crypto isn't banned in India, and Binance is registered with the Financial Intelligence Unit, India (FIU-IND) as a reporting entity under the Prevention of Money Laundering Act (PMLA). Registration is for anti-money-laundering purposes. It isn't a licence, and it doesn't mean the government guarantees the platform.
What happened: blocked, registered, fined
- 2023: India requires crypto platforms serving Indians to register with FIU-IND. In December 2023, FIU-IND issued notices to Binance and other offshore exchanges for operating without registration, and their websites were blocked in India.
- May 2024: Binance registered with FIU-IND, alongside KuCoin, subject to a penalty for its past non-compliance.
- June 2024: FIU-IND imposed a penalty of ₹18.82 crore on Binance under section 13 of the PMLA, with directions to comply with its obligations.
Since then, Binance has been operating for Indian users as a registered entity. Check the current status on FIU-IND's website before depositing, as registrations can change. See FIU-registered exchanges.
How Indians use Binance
- Rupee deposits and withdrawals: mainly through P2P, where you buy USDT from, or sell to, another user who pays you by UPI or bank transfer. Binance acts as the escrow for the crypto, not the rupees.
- Trading: a much wider range of coins and pairs than most Indian exchanges.
- Crypto withdrawals: to your own wallet on many networks. See moving USDC to your wallet.
The P2P risk most people underestimate
On P2P, the rupees come from a stranger's bank account. If that money is linked to fraud anywhere in the chain, the police can ask your bank to freeze your account, sometimes for months, even if you did nothing wrong. This is one of the most common problems Indian crypto users report.
To reduce the risk:
- trade with experienced, verified counterparties with long histories,
- avoid unusually good rates,
- receive money only from an account in the counterparty's own name,
- keep amounts small and keep screenshots and records of every trade.
Full guide: P2P crypto and bank account freezes.
The October 2026 hack
In October 2026, Binance suffered a hack of about $6.3 billion, the largest on record. Binance said it would cover user losses and reopened withdrawals in phases from 1 November. It's a reminder that even the largest exchange can pause withdrawals. See our coverage: Binance hack and Indian users and withdrawals resume.
Tax on Binance trades
Using a foreign-headquartered exchange doesn't change Indian tax:
- gains on selling or swapping crypto are taxed at 30% plus 4% cess,
- losses can't be set off,
- every transfer goes in Schedule VDA of your ITR,
- funds held on a foreign platform may need reporting in Schedule FA.
Check your AIS for any TDS recorded. Read crypto tax in India and foreign exchanges and Schedule FA.
Binance or an Indian exchange?
| Binance | Indian exchanges | |
|---|---|---|
| FIU-IND registered | Yes | Yes, for the major ones |
| Rupee access | Mainly P2P | UPI and bank transfer |
| Coin range | Very wide | Narrower |
| Tax statements for India | Download trade history yourself | Often provide TDS and tax reports |
| Support and grievances | Global support | Indian support teams |
Compare platforms on the exchange safety board or the Binance page. Whichever you use, don't keep more on any exchange than you need, and secure your account with 2FA.
Frequently asked questions
Was Binance banned in India?
In December 2023, FIU-IND issued notices to Binance and other offshore exchanges for serving Indians without registering, and their websites were blocked. Binance then registered with FIU-IND in 2024 and was fined ₹18.82 crore for the earlier non-compliance.
Does Binance deduct 1% TDS for Indian users?
As an FIU-registered platform serving Indians, Binance is expected to follow Indian rules, but check your statements and AIS to see what was deducted. Whatever is or isn't deducted, you must report your trades in Schedule VDA and pay tax on gains.
Is Binance P2P safe in India?
P2P trades are with other users, not Binance. If the rupees you receive came from fraud, police can freeze your bank account. Trade small amounts, use verified counterparties, and keep records. See our P2P bank freeze guide.
Is it safe to keep funds on Binance after the 2026 hack?
Binance said it would cover user losses from the October 2026 hack and reopened withdrawals in phases. Any exchange can be hacked or freeze withdrawals, so don't keep more on one platform than you need to trade.
Can I report Binance trades in my ITR?
Yes, and you must. Download your trade history from Binance and report each transfer in Schedule VDA. Holdings on a foreign platform may also need to be reported in Schedule FA.
Sources
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