Cryptocurrency is not a legal tender in India; however, investing and making profits from it is not illegal. So, if you are a crypto investor or planning to invest in digital currencies, the next question is how to convert your crypto into cash for an easy profit. Well, there are some effective ways to do this.
To know the best methods, read on.
Broker exchanges
A third-party broker or a cryptocurrency exchange enables you to trade your digital money into a fiat currency of your choice.
You simply deposit your cryptocurrency into a crypto exchange/broker of your choice and request a withdrawal in one of the available fiat currencies. It is a simple, easy and secure process; however, it takes around 4-6 days to get the money in your bank account.
Moreover, brokers are restricted by money laundering laws, so you must withdraw your money to the same account you used to deposit your cryptocurrency. Exchanges can charge transaction fees for the fund's withdrawal.
How to use broker exchanges?
There are various crypto exchanges in India today. Let’s take the example of CoinDCX to learn how to use a broker exchange.
Steps to deposit crypto
- Log in to your official account on theCoinDCX website
- Click on “Funds” on the top right corner of the DCXtrade page
- Then click on the "Deposit" option and select the cryptocurrency you wish to deposit
- You will see your wallet address and tag.
- Copy the wallet address on the other platform from which you wish to deposit.
- Click on ‘Send’, and you will receive crypto in your CoinDCX wallet.
Steps to withdraw crypto
- Login to your CoinDCX account
- Go to the “Funds” section and click on the “Withdraw” option
- Select the cryptocurrency you wish to withdraw
- Enter the destination wallet address and click on “Send”
- Provide the 6-digit OTP or the Google 2FA, then click on verify to validate the withdrawal request
- Open the verification e-mail and confirm it
Once the e-mail is confirmed, the balance will be deducted from your crypto wallet, and the token will be sent to your specified wallet address.
Steps to withdraw INR from a broker exchange account
Withdrawals on CoinCDX take place through their 24X7 automated payment gateway and a manual processing channel.
- Login to your CoinDCX account and click on the “Funds” section
- Select INR Wallet and click on the “Withdraw INR to Bank” option
- Enter your withdrawal amount and click on “Verify”
- Check your details on the confirmation screen
- Enter the OTP/2FA and click on Submit
You will receive your money within 6 hours in your bank account.
Crypto debit cards
Another method of cashing in your cryptocurrency is by using crypto-based debit cards. You can add your digital money to your crypto debit card, which will automatically convert your cryptocurrency to a fiat currency (INR in your case) of your choice.
One catch about this method is that you have to pay high transaction fees.
Some of the best Indian crypto-based debit cards are:
- Wirex Debit Card
- Coinbase Debit Card
- Crypto.com Prepaid Debit Card
- Binance Debit Card
- Nexo Debit Card and much more
Peer-to-peer exchanges
Peer-to-peer exchange platforms are a quick and anonymous way to convert your cryptocurrency to cash. In this method, you can select the payment method in which the buyer pays for your crypto.
The transactions in this process are faster than third-party brokers, and you often get a better exchange rate for your crypto. Also, the transaction fees are comparatively lower.
Note: Always use a reputed peer-to-peer platform for cashing in, and remember to ask for ID proof and proof of payment before releasing your cryptocurrency to them. It is also a good practice to keep your crypto locked until you receive payment from the individual.
Taxes and other charges while transferring
To function, crypto exchanges charge certain fees as a payment for the services they offer. They are mainly classified into two types:
- Exchange fees
A cryptocurrency exchange charges fees for the following:
- Trading
- Deposits in digital wallets
- Withdrawals
- Liquidations
- Network fees
Cryptocurrency is hosted on networks and computers all over the world. The trades between buyers and sellers are anonymous, and there is no third party or government intervention. Finally, all your transactions are recorded on a public blockchain. Thus network fees are charged to keep the process going.
The transaction fees vary from one exchange service to another; however, the rate varies between 0.1% to 1% or more per trade.
- Taxes
Taxes come into play only when you cash in or liquidate your crypto assets.
If you hold your cryptocurrency for more than 36 months, your profit comes under long-term capital gains tax. The tax rate for such situations is flat, 20% plus applicable surcharge and cess post indexation. Your tax amount is calculated after adjusting it to the inflation index.
The Indian Government is considering a 2% equalisation levy on transactions with foreign crypto exchanges. In addition, 18% GST is charged for cryptocurrency exchanges under the financial services category.
Crypto being a volatile market, can result in a gain or loss at any time. Therefore, keeping a close watch on the market and making timely decisions will keep you ahead in the game. Follow the steps mentioned above to deposit and withdraw money on crypto exchanges.
