Tax on Gifted Crypto in India

India taxes income from Virtual Digital Assets under Section 115BBH of the Income-tax Act 1961, introduced by the Finance Act 2022 and effective from Assessment Year 2023-24.

The rate is a flat 30% plus applicable surcharge and 4% cess, regardless of your income slab. A separate provision, Section 194S, requires 1% TDS on the transfer of a VDA, in force since 1 July 2022.

Gifts are taxed in the recipient's hands

The Finance Act 2022 brought Virtual Digital Assets within Section 56(2)(x), which taxes gifts received without consideration. The charge falls on the person receiving the gift, not the person giving it.

Where the aggregate fair market value of gifts received without consideration in a financial year exceeds ₹50,000, the whole amount — not just the excess — is taxable as income from other sources at your slab rate.

The relative exemption

Gifts from a relative as defined in the Act are exempt regardless of value. The definition is specific and narrower than everyday usage. It includes spouse, brother or sister, brother or sister of the spouse, brother or sister of either parent, any lineal ascendant or descendant, and the lineal ascendants or descendants of the spouse, plus the spouse of those persons.

Notably, a cousin is not a relative for this purpose. Neither is a friend, regardless of closeness.

Gift from	Taxable?
Spouse, sibling, parent, child, grandparent	Exempt as a relative
Sibling of spouse, sibling of parent	Exempt as a relative
Cousin	Taxable above ₹50,000 aggregate
Friend or colleague	Taxable above ₹50,000 aggregate
On the occasion of your marriage	Exempt
Under a will or by inheritance	Exempt

The part people miss: cost basis on later sale

Receiving a gift tax-free does not make its later sale tax-free. When you eventually transfer the gifted VDA, Section 115BBH applies to that transfer at 30%, and you need a cost of acquisition to compute the gain.

This creates a practical problem. If the gift was exempt and you never recorded a value, you may have no documented basis when you sell. Record the fair market value on the date of receipt at the time it happens, along with evidence of the relationship where the relative exemption is claimed.

Airdrops are not gifts

Tokens received through an airdrop are generally treated as income on receipt rather than as a gift, and then as a VDA transfer when disposed of. See airdrop tax in India for that treatment, which differs in both timing and rate.

Gifts given, not received

Section 56(2)(x) taxes the recipient. The separate question is whether giving away a VDA is itself a transfer triggering Section 115BBH for the giver.

The charge under 115BBH is on income from the transfer of a VDA, computed as consideration less cost of acquisition. Where a gift is genuinely without consideration, there is no consideration to compute against — but the interaction between the gift provisions and the transfer charge is an area where views differ and the position is not free from doubt. Anyone making a substantial gift of crypto should take advice before doing so rather than after.

Documenting a gift properly

• A written gift deed or at minimum a dated record stating the donor, recipient, asset, quantity and that it was without consideration.
• Evidence of the relationship where the relative exemption is relied on.
• The on-chain transaction hash or exchange transfer record.
• The fair market value in INR on the date of transfer, with the source of that price.

The last item is the one most often skipped and the one most often needed later, because it becomes the recipient's cost of acquisition when they eventually sell.

Gifts between spouses and clubbing

Gifts between spouses are exempt from the Section 56(2)(x) charge. However, the Income-tax Act contains clubbing provisions under Section 64 under which income arising from an asset transferred to a spouse without adequate consideration can be treated as income of the transferor rather than the recipient.

How clubbing interacts with VDA income taxed under 115BBH is not something to assume in either direction. If you are considering transferring crypto to a spouse for tax reasons, that is precisely the situation the clubbing provisions exist to address, and it warrants specific advice.

Related guides

• Crypto tax in India: the complete guide
• Crypto tax calculator for India
• Tracking crypto for Indian tax records
• Best crypto exchanges in India

This page is educational and not tax advice. Indian tax law changes and individual circumstances differ. Confirm your position with a qualified chartered accountant before filing.