With the growing popularity of cryptocurrency in India, investors are exploring new ways to diversify their portfolios, and real estate is at the top of that list. However, a significant question remains: Can we purchase property with Bitcoin in India? The idea of using cryptocurrency to purchase a home or plot might seem bold, but it’s gaining traction as both buyers and tech-savvy sellers show interest in alternative payment methods. 

However, the path isn’t as straightforward as it seems. From regulatory grey areas to tax implications and technical know-how, there’s a lot to unpack before you even shortlist a property.

In this blog, we’ll walk you through the possibilities, legal concerns, and real-world steps involved in using Bitcoin or other cryptocurrencies to invest in property in India.

TL;DR

• Bitcoin is not legal tender in India, but owning and trading it is not illegal.

• Most property transactions involving Bitcoin require conversion to INR before registration.

• Key challenges include crypto’s price volatility, lack of regulation, and compliance hurdles.

• All transactions must follow strict documentation, tax, and KYC norms.

• Consulting legal and financial experts is critical for a secure crypto-property deal.

Legal Framework for Bitcoin in India

Although cryptocurrency has gained popularity among Indian investors, it remains in a regulatory grey area. Here's what you need to know before taking the plunge:

1. Current legal status of Bitcoin as a currency

As of now, Bitcoin is not recognized as legal tender in India. This means you can’t use it the same way you use INR to settle a property purchase. However, owning and trading Bitcoin is not illegal. 

The Reserve Bank of India (RBI) lifted its banking ban on crypto transactions in March 2020 (Supreme Court ruling in Internet and Mobile Association of India vs. RBI), which allows crypto exchanges and users to operate. But the lack of a clear legal framework means buyers and sellers need to tread carefully.

2. Regulatory authorities overseeing Bitcoin transactions

Multiple government bodies have a say in crypto-related matters:

• RBI oversees financial system stability and has warned about the risks of virtual currencies.

• SEBI (Securities and Exchange Board of India) could regulate crypto assets if classified as securities.

• The Ministry of Finance and the Income Tax Department are involved in drafting policy and enforcing tax compliance.

3. Tax implications for Bitcoin transactions in property deals

According to Section 2(14) of the Income Tax Act, 1961, cryptocurrencies like Bitcoin are treated as capital assets. This means:

• Selling Bitcoin for INR to fund a property purchase may trigger capital gains tax, 20% for long-term and according to the slab for short-term.

• Receiving Bitcoin as payment (by a seller) is treated as income from business or profession and taxed accordingly.

• All crypto transactions must also comply with TDS rules under Section 194S, which mandates a 1% tax deduction on payments made for the transfer of virtual digital assets (VDAs).

The takeaway? While there’s no outright ban on using Bitcoin for property transactions, the legal framework remains patchy. Anyone attempting such a deal should consult legal and tax professionals to ensure full compliance and avoid future complications.

Now that you know the legal boundaries, let’s walk through what the actual buying process looks like when using Bitcoin for a real estate deal in India.

Also Read: Cryptocurrency's Impact on Real Estate Transactions and Ownership

Process of Buying Property with Bitcoin

While still unconventional, property purchases made with Bitcoin are slowly gaining interest among a niche segment in India. If you're determined to go this route, here's how the process typically unfolds:

1. How to find property sellers accepting Bitcoin

The biggest hurdle is locating a seller open to crypto transactions. Most mainstream developers in India don't officially accept Bitcoin. However:

• You might find individual sellers in metro cities or tech hubs (like Bengaluru or Hyderabad) who are crypto-forward.

• Crypto and blockchain forums, Telegram groups, or niche real estate platforms may have listings where the seller mentions willingness to negotiate in Bitcoin.

• It's common to structure such deals as a hybrid model, where part of the payment is made in Bitcoin and the rest via bank transfer.

2. Steps to complete a property transaction using Bitcoin

Once you identify a willing seller:

• Agree on the valuation in INR and then convert to Bitcoin based on the live exchange rate.

• Use a secure crypto wallet and ensure both parties agree on the type of cryptocurrency and the exchange platform for conversion.

• Most deals involve converting Bitcoin into INR before registration to avoid legal ambiguities. The actual transaction may occur through a crypto-to-INR conversion, followed by a traditional payment and registration process.

3. Necessary documentation for Bitcoin property transactions

Documentation is critical to prove the legitimacy of funds and avoid future scrutiny:

• The sale agreement must clearly state the consideration amount in INR (even if paid partly in crypto).

• Maintain receipts or screenshots of the crypto transaction, exchange conversion proof, and bank statements.

• Both buyer and seller should execute a declaration of source of funds and ensure KYC compliance for added legal clarity.

Need help identifying crypto-friendly properties or structuring hybrid deals? Connect with BCD India for personalized support in crypto-integrated real estate investments.

Even with growing interest in crypto deals, buying property using Bitcoin in India isn’t exactly smooth sailing. Let's look at the roadblocks and how to work around them.

Also Read: Real Estate Tokenization: A New Era for Indian Investors

Challenges of Using Bitcoin to Buy Property

While crypto adds speed and flexibility, it also introduces some unique hurdles in the Indian real estate industry. Here’s what you’re likely to face, and how to deal with it:

1. Volatility of Bitcoin value affecting purchase decisions

Bitcoin’s price can fluctuate wildly even within a single day. This creates uncertainty around the final value of a deal, especially in high-stakes transactions like real estate.

Solution: Peg the deal to INR at the time of signing and use crypto only as a mode of payment. Consider using escrow services that lock in the crypto amount at a specific exchange rate for a short period.

2. Lack of standardized regulations for crypto-real estate transactions

India currently lacks a regulatory framework that specifically addresses property purchases made with cryptocurrency. This creates confusion around tax liabilities, legal enforceability, and compliance norms.

Solution: Route the transaction through crypto-to-INR conversion before registration. Ensure your documentation reflects all payments in INR. Work with a lawyer experienced in crypto compliance to safeguard your interests.

3. Issues in verifying the legitimacy of transactions

Since crypto payments can be pseudonymous, verifying the source of funds becomes a challenge, especially under anti-money laundering laws.

Solution: Maintain complete transaction history, including wallet details, exchange account KYC, and crypto-to-INR conversion records. Always use regulated cryptocurrency exchanges in India, such as CoinDCX, WazirX, or CoinSwitch, with proper audit trails.

Conclusion

The idea of buying property with Bitcoin in India is exciting, but it remains a relatively new and developing space. While the regulatory framework remains ambiguous, crypto-savvy buyers who understand the risks and do their due diligence may find opportunities, especially in resale markets or through direct negotiations with individual sellers.

That said, caution is key. Given the volatility of Bitcoin prices, the lack of mainstream acceptance, and compliance hurdles, it's essential to proceed with the proper legal and financial guidance. As crypto adoption increases and regulations mature, we may see more structure and security in these transactions.

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FAQs

1. Is it legal to buy property using Bitcoin in India?
While it’s not illegal to own or trade Bitcoin in India, it’s not recognized as legal tender. So, property transactions usually involve converting Bitcoin to INR before completing the sale.

2. Do real estate developers in India accept Bitcoin?
Most mainstream developers do not officially accept Bitcoin. However, individual sellers or property owners reselling in some metro cities may be open to crypto transactions.

3. How is tax calculated on Bitcoin when used to buy property?
As per Section 2(14) of the Income Tax Act, Bitcoin is considered a capital asset. If sold to fund a property, you may owe capital gains tax. TDS under Section 194S also applies to crypto transfers.

4. What documents should I keep for a Bitcoin-based property purchase?
You should retain sale agreements stating INR value, crypto transaction receipts, conversion proofs, KYC records, and bank statements. These are essential for tax and legal compliance.

5. What risks should I be aware of when using Bitcoin for real estate?
Major risks include market volatility, fraud due to unregulated platforms, irreversible transactions, and legal grey areas. Working with crypto-literate professionals is crucial.