How to buy Bitcoin ETF (ETF) in India?

Bitcoin has long grabbed attention, with stories of big gains in short spans of time. Many Indians now ask how they can invest in a Bitcoin ETF. Here is how it works, and what to be careful about.

Bitcoin ETF vs buying Bitcoin directly

A Bitcoin ETF is a fund that trades on a stock exchange and gives you exposure to Bitcoin’s price without holding the coin yourself. The key point for Indians is that these ETFs are listed in the US, not in India. Indian apps and brokers do not sell them directly.

Buying Bitcoin directly is different. You can do that through exchanges operating in India, subject to Indian tax rules.

How Indians can invest in a US Bitcoin ETF

The usual route is an international brokerage account that accepts Indian customers, funded through the Liberalised Remittance Scheme (LRS):

1. Open an account with a broker that offers access to US markets.
2. Send money abroad using LRS, which allows resident individuals to remit up to US$250,000 per financial year.
3. Once the funds are credited to your US brokerage account, buy the ETF like any other US-listed security.

Tax and costs to know about

• TCS on LRS. Tax collected at source applies to certain remittances above the prescribed threshold. It was introduced in 2023 at 20% for many purposes, and the threshold and rates have been revised since, so check the current rules. TCS can be claimed as credit against your tax liability, but your money can be tied up until then.
• TDS on crypto. The 1% TDS rule applies to transfers of virtual digital assets in India. Since an ETF is a security rather than the crypto itself, the treatment differs, so confirm with a tax professional.
• Capital gains. Gains on foreign securities are taxed under Indian rules, and you may also have to report foreign assets in your return.
• Fund expenses. Each ETF charges an annual management fee, and these differ between providers. Compare them before you choose.

What about Ethereum?

Ethereum is the second-largest crypto asset by market value, and interest in ETFs linked to it has grown too. The same questions apply: where it is listed, how you can access it from India and what taxes apply.

Before you invest

Crypto prices swing sharply, and past gains do not guarantee future returns. Rules on foreign investment and crypto tax keep changing, so speak to a qualified tax or financial advisor and only invest what you can afford to lose. This article is for information and is not investment advice.