Tax on crypto gifts, airdrops and mining in India

Most crypto tax guides focus on buying and selling. But plenty of Indians receive crypto without buying it: a gift from a cousin abroad, tokens airdropped into a wallet, mining rewards or an exchange's sign-up bonus. These are taxable too, and the rules are less obvious. Here is how they are generally treated.

Key takeaways

• Crypto is "property" for gift-tax purposes. Gifts from non-relatives worth more than ₹50,000 in a year are taxable in your hands.
• Gifts from defined relatives, on marriage, or by will or inheritance are exempt when received.
• Airdrops, referral rewards and bonuses are commonly treated as income when received, then taxed at 30% when sold.
• Mined coins are taxed at 30% when sold, and mining expenses such as electricity are not deductible under the VDA regime.
• The law is not explicit on several points, so keep records and get advice from a chartered accountant.

The starting point: the VDA regime

India taxes any transfer of a Virtual Digital Asset at a flat 30% plus cess and surcharge, with 1% TDS on transfers and no set-off of losses. That covers the moment you sell or swap crypto, however you got it. The questions below are about what happens before that, when crypto first arrives in your account. For the basics, see our crypto tax guide.

Crypto received as a gift

Since 2022, the definition of "property" for the gift-tax rule (section 56(2)(x) of the 1961 Act) includes VDAs. So:

• From a non-relative: if the total value of gifts (crypto and other property) you receive in a financial year exceeds ₹50,000, the entire value is taxable as income from other sources at your slab rate.
• From a relative: gifts from relatives as defined in the Act are exempt. Relatives include your spouse, parents, siblings, and lineal ascendants or descendants.
• On marriage, or by will or inheritance: exempt when received.

When you later sell the gifted crypto, the sale is taxed at 30% under the VDA rules. How your cost is worked out depends on whether the gift was taxed on receipt; your CA can confirm the right figure. Gifting crypto is also a transfer by the giver, and whether TDS applies to gifts is an area where practice varies.

Example

A friend (not a relative) sends you ETH worth ₹70,000. Because that exceeds ₹50,000, the full ₹70,000 is added to your income for the year. If your father sent the same ETH, it would not be taxed on receipt. In both cases, a later sale is taxed at 30% on the gain.

Airdrops

An airdrop is when a project distributes free tokens to wallet holders, often to reward early users. The Income-tax Act has no airdrop-specific rule. Common approaches include:

• Treating the airdrop as income from other sources at its fair market value on receipt, taxed at slab rates; or, where the gift rule is applied, taxing it if total gifts from non-relatives exceed ₹50,000.
• Taxing the eventual sale at 30% under the VDA regime.

Many airdropped tokens have little liquidity, and a token's value on receipt can be hard to establish. Record the date, quantity and the best available INR price. Be careful, too: unsolicited tokens are a common scam vector, luring you to fake websites that drain your wallet. Read how to spot crypto scams in India before interacting with any unknown token.

Referral bonuses, cashback and sign-up rewards

Crypto received from an exchange for referring friends or completing tasks is generally treated as income when received, taxed at your slab rate, with any later sale taxed at 30%. Keep the platform's statements.

Mining and staking rewards

Crypto mining in India is not banned, but the tax treatment is harsh. When you sell mined coins, the transfer is taxed at 30%, and since the VDA regime allows no deduction except cost of acquisition, costs such as electricity, hardware and internet cannot be deducted. Mined coins are often treated as having a nil cost of acquisition, so the whole sale value is effectively taxed. Some advisers also treat mining rewards as income on receipt if mining is carried on as a business. Staking rewards raise similar questions, so see our guide to staking and how it is taxed.

How to report these in your ITR

• Income on receipt (taxable gifts, airdrops, rewards): usually under "income from other sources", or business income if applicable.
• Sale or swap: in Schedule VDA, with dates, cost and sale value.
• TDS: match the 1% TDS in your Form 26AS and AIS and claim credit.
• Tracking: log gifted, airdropped and mined coins in a portfolio tracker with their INR value on receipt, so your cost records are ready at filing time.

Our walkthrough on filing crypto taxes in your ITR covers the forms, and the crypto tax calculator helps estimate the tax on sales. To check the INR value of a token on a given day, the crypto converter gives current rates; for historical values, use the exchange's records.

Frequently asked questions

Is gifting crypto taxable in India?

For the receiver, crypto gifts from non-relatives are taxable if the total value of gifts received in the year exceeds ₹50,000. Gifts from relatives, on marriage or by inheritance are exempt. Any later sale is taxed at 30%.

Are airdrops taxable in India?

There is no specific rule, but airdrops are commonly treated as income when received, at their fair market value, and the eventual sale is taxed at 30% under the VDA regime. Confirm the treatment with a chartered accountant.

Is crypto mining legal in India?

Mining is not banned in India. It is, however, taxed heavily: the sale of mined coins is taxed at 30%, and mining costs such as electricity cannot be deducted.

Can I gift crypto to my parents without tax?

Gifts between relatives as defined in the Income-tax Act, including parents and children, are not taxed in the receiver's hands on receipt. Later sales are taxed at 30%. Keep a record of the gift.

This guide is educational and general in nature. It is not investment, tax or legal advice, and nothing here is a guarantee of any return. Crypto is volatile and you can lose money; only invest what you can afford to lose.

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This article is AI-assisted, educational and general in nature. It is not financial advice and never a guarantee of profit. Every trade is at your own risk on your own exchange. See our risk disclosure and editorial policy.