Cryptocurrency is currently in a grey area in India. It is not explicitly banned, but it is also not regulated. The government has been working on a cryptocurrency bill, but it has not yet been passed into law.
In the meantime, the government has taxed cryptocurrency gains at 30% and imposed a 1% TDS on crypto intra-traders. This suggests that the government is open to the possibility of regulating cryptocurrency in the future.
However, there are also some signs that the government may be considering a ban on cryptocurrency. In 2021, the Reserve Bank of India (RBI) issued a circular warning banks against dealing in cryptocurrencies. The RBI has also expressed concerns about the risks associated with cryptocurrencies, such as money laundering and terrorist financing.
Overall, the legal status of cryptocurrency in India is still unclear. Investors should be aware of the risks involved before investing in cryptocurrencies.
Note: The information above is based on my understanding of the current situation. It is important to consult with a legal expert for specific advice on the legal status of cryptocurrency in India.