NFT, airdrop, staking and gifted crypto: tax treatment in India

Selling or swapping an NFT or crypto is clearly taxed at 30 percent. Gifts of crypto above ₹50,000 a year from non-relatives are clearly taxable at slab rates, while gifts from relatives, at marriage or by inheritance are exempt. Airdrops, mining and staking rewards are not specifically addressed by the law, so treat them as unsettled: record everything and take a consistent, documented position with your chartered accountant.

NFTs: sellers, buyers and creators

An NFT is expressly inside the definition of a virtual digital asset (section 2(111) of the Income-tax Act, 2025, old section 2(47A)). So selling an NFT, or exchanging one NFT for another, is a transfer taxed at 30 percent with only cost of acquisition allowed.

One notified exclusion exists. An NFT is outside the definition where its transfer results in the transfer of ownership of an underlying tangible asset and that transfer is legally enforceable. Most NFTs sold as digital art, music, game items or collectibles do not carry such ownership, so they remain VDAs. If you plan to rely on the exclusion, keep documents proving the legal transfer of the physical asset.

Creators face extra questions. Take Rhea, an illustrator in Jaipur who mints her artwork and sells it for ETH.

• Each sale of an NFT she created is a transfer of a VDA. Her cost is arguably the minting cost. Her time, software and studio costs are not deductible against this income.
• The ETH she receives is itself a VDA. When she later converts it to rupees, any gain over its value at receipt is taxed again at 30 percent, and a fall in value is a loss that cannot be set off.
• Royalties on later resales are not a transfer by her and are more naturally taxed at slab rates. This is a reasoned view and the point is not settled.

Gas fees and marketplace commissions raise the same cost question as exchange fees. Be conservative and keep receipts.

Gifted crypto

Since the Finance Act, 2022, VDAs are treated as “property” for the gift tax rule, now carried into the Income-tax Act, 2025 under a new section number (old section 56(2)(x)). If an individual or HUF receives VDAs without consideration and their total fair market value in the year exceeds ₹50,000, the whole value is taxed in the receiver’s hands as income from other sources.

• Exempt: gifts from specified relatives (such as spouse, siblings, parents and lineal ascendants and descendants), gifts on marriage, and receipts under a will or by inheritance.
• Taxable: a birthday present of tokens worth ₹75,000 from a college friend. A similar gift from the receiver’s father would be exempt.
• The giver: does not pay tax on the gift as such, since there is no consideration. A giver who bought the coins cheaper does not usually have a taxable transfer, but check if the gift is in fact payment for something.

What cost does the receiver use on a later sale? For gifted property in general, a taxed gift takes the value taxed as cost, and an exempt gift from a relative takes the previous owner’s cost. Whether that fully applies to VDAs under the special 30 percent regime has not been expressly clarified. Keep the giver’s purchase records and the market value on the day of gift.

Airdrops, staking and mining: the unsettled zone

None of these is specifically mentioned in the VDA tax provisions, and the tax authorities have not issued detailed guidance. The positions below are reasoned views, not settled law.

1. Airdrops. Free tokens sent by a project. A cautious view treats them as received without consideration, so the gift rule applies if the year’s total of such receipts exceeds ₹50,000. If you earned the tokens by doing something (promotion, testing), they may be income from other sources, or business income if you do this as a business. Later sale is taxed at 30 percent.
2. Staking and lending rewards. The common professional view is that rewards are income when received, at their rupee value that day, taxed at slab rates, and that a later sale is a VDA transfer at 30 percent with the earlier taxed value as cost.
3. Mining. Electricity, hardware and internet are not “cost of acquisition” in the ordinary sense, so many advisers treat a mined coin as having nil cost, which means the entire sale value is taxed at 30 percent. Whether mining receipts are also taxable on receipt, and how hardware is treated, is not clarified.

Practical protection is a simple log. For every reward or airdrop, note the date, token, quantity and rupee value that day, and the platform. If your treatment is questioned, a consistent method, supported by a CA’s note, is far better than silence.

Salary and fees paid in crypto

If an employer pays part of salary in crypto, the value at the time of payment is salary and is taxed at slab rates with TDS on salary. The employee’s cost for those coins is that value. A freelancer paid in USDT by a foreign client reports the rupee value on the date of receipt as professional income. If the USDT is later sold for more, the difference is VDA income at 30 percent, and a fall is an ignored loss.

Under the Foreign Exchange Management Act, 1999, export earnings are expected to be realised through authorised banking channels. Receiving payment for exported services in crypto raises a compliance question that is not clearly settled. Take advice before accepting it as payment from abroad.

Keep the record that wins arguments

• A dated log of every receipt that is not a purchase: gifts (with giver name and relationship), airdrops, rewards, salary or fees.
• Wallet addresses you own and transaction IDs for on-chain moves.
• Rupee value source (exchange price on that day) saved as a screenshot or export.
• A one-page note of the treatment you adopted for each unsettled item.

When you file, receipts taxed at slab rates go to the relevant head, and later sales go into Schedule VDA. Our guide on how to report crypto in your ITR shows the steps, and the 30 percent tax explainer covers the basic rule.

To go deeper, see the Crypto and VDA Law and Tax course.

Frequently asked questions

Is tax payable when I mint an NFT?

Minting alone is not a sale. Tax arises on transfer, that is when you sell or exchange the NFT. The cost question for minting fees is debated.

Do I pay tax on a crypto gift from my brother?

No, receipts from specified relatives are exempt. A sibling is within the relatives listed in the law.

Are airdrops taxable?

The law is silent. The cautious approach is to treat an airdrop as a gift received without consideration and to report it if the year’s total is above ₹50,000, then pay 30 percent on later sale.

How are staking rewards taxed?

There is no specific rule. The common view is income at slab rates when received, then 30 percent on sale of the reward tokens.

Can I deduct mining electricity bills?

The VDA rules allow only cost of acquisition, so deduction is doubtful. The position on mining is unsettled, so take professional advice.

Are game tokens and loyalty points VDAs?

Ordinary reward and loyalty points are excluded by notification. A game token that is cryptographically generated, transferable and used as a store of value can be a VDA.

Quick quiz

Sources

• Income-tax Act, 2025: section 2(111) (virtual digital asset), section 393(1) (TDS)
• Income-tax Act, 1961: section 2(47A), section 56(2)(x), section 115BBH
• Central Government notifications Nos. 74 and 75 of 2022 (exclusions from VDA)
• Foreign Exchange Management Act, 1999 (realisation of export proceeds)
• Income Tax Department guidance on taxation of virtual digital assets

This page is for education and general information, not legal advice for a specific case. Law as on 7 November 2026.