Gifting crypto to a family member. Inheriting a parent’s Bitcoin. Leaving your Ethereum holdings to your children. These are real situations Indian investors face but almost no guide addresses them clearly.
Can You Gift Cryptocurrency in India?
Yes. Gifting crypto in India is legal. There is no prohibition. However, the tax treatment depends on the relationship between giver and recipient and the value of the gift.
Is gifting crypto legal under Indian law?
Crypto gifts are treated as VDA transfers under the Finance Act 2022. The recipient may have a tax obligation depending on the relationship and value. The giver has no separate gift tax liability.
FEMA implications for NRI-resident gifts
When gifting crypto between an Indian resident and an NRI, FEMA rules may apply to the transfer of value across borders. Consult a CA familiar with both VDA taxation and FEMA before cross-border crypto gifting.
Tax on Crypto Gifts; Who Pays and How Much?
Gifts from relatives: fully exempt
Under Section 56(2)(x), gifts received from “relatives” are fully exempt regardless of value. Relatives include:
- • Spouse
- • Brother or sister (of taxpayer or spouse)
- • Brother or sister of either parent
- • Lineal ascendants/descendants (parents, children, grandparents, grandchildren)
- • Spouse of any of the above
If your father gifts you ₹10 lakh worth of Bitcoin, you owe zero tax on receipt.
Gifts from non-relatives: taxable above ₹50,000
If total value of crypto gifts from non-relatives exceeds ₹50,000 in a financial year, the entire gift value becomes taxable as “Income from Other Sources” at your applicable slab rate.
Example: A friend gifts you ₹60,000 worth of ETH. The entire ₹60,000 is added to your income and taxed at your slab rate.
Gifts received on marriage: exempt regardless of value
Crypto received as a wedding gift is fully exempt regardless of value or the relationship with the giver. This is a specific carve-out under Section 56(2)(x).
What Happens When You Later Sell Gifted Crypto?
Your cost of acquisition = the original purchase price paid by the donor, not the FMV at the time you received the gift.
Example:
- Father bought 0.1 BTC at ₹20 lakh in 2020
- He gifts it to you in 2025 when BTC is ₹60 lakh (gift value ₹6 lakh, exempt)
- You sell in 2026 when BTC is ₹80 lakh
- Your gain = ₹80L – ₹20L (father’s cost) = ₹60 lakh
- Tax = 30% on ₹60 lakh = ₹18 lakh
You must obtain and document the donor’s original purchase records to calculate your cost basis accurately.
Crypto Inheritance in India: What the Law Says
When you inherit crypto through a will or legal succession, the transfer itself is not taxed. Section 56(2)(x) explicitly excludes property received by inheritance or will.
How to legally transfer crypto via will or nomination
- • Include specific exchange account details and wallet information in your will
- • Name an executor who is crypto-literate or willing to learn the access process
- • Register a nominee on CoinSwitch under Account Settings
Probate and crypto: practical challenges
Unlike bank accounts, crypto has no central registry. Without a clear handover plan, heirs may be permanently locked out. Private keys stored only in the deceased’s memory are irretrievable.
Tax on Selling Inherited Crypto
Cost of acquisition for inherited crypto
Same logic as gifted crypto: your cost = the original price paid by the deceased.
30% flat gain tax + 1% TDS applies on sale
Section 115BBH and Section 194S apply at sale. No LTCG benefit, no exemption thresholds.
Read more: Section 115BBH: Virtual Digital Assets Taxation Scheme (Cryptocurrency Tax)
NRI inheriting crypto from India: FEMA and DTAA angles
The NRI must follow RBI remittance rules for repatriating the sale proceeds. DTAA relief does not apply to the 30% VDA tax in most bilateral treaties currently.
How to Document a Crypto Gift Properly
A formal gift deed is not legally required but is strongly recommended for high-value transfers. It should state:
- Date of gift
- Asset gifted (coin, quantity)
- FMV in INR at date of gift
- Wallet address or exchange account transferred to
- Relationship between donor and recipient
- Donor’s original purchase date and price (for recipient’s future cost basis records)
Common Tax Mistakes on Crypto Gifts
- Ignoring FMV at date of receipt: Even for exempt gifts, record the FMV to establish cost basis for future sale tax calculations.
- Assuming relative gifts are always tax-free at sale: The gift itself is exempt, but the capital gain on sale is not.
- Not disclosing inherited crypto in Schedule VDA: All crypto holdings must be declared in your ITR regardless of how they were acquired.
Crypto Estate Planning Tips for Indian Investors
Include crypto in your will: Specify exchange accounts, hardware wallets, and approximate holdings. Name an executor who understands crypto access.
Private key handover: Store your seed phrase securely; a sealed envelope with a trusted solicitor, or a specialist crypto inheritance solution.
Nomination on CoinSwitch: Log in → Account Settings → Add Nominee. This designates who can claim on death. The exchange will require succession documentation.
Consider exchange-held assets over DeFi for assets you plan to pass on; exchange-held assets are far easier for heirs to claim than non-custodial DeFi positions.
KEY TAKEAWAYS
- Crypto gifts from relatives are fully tax-exempt; from non-relatives above ₹50,000, the entire amount is taxable as income
- Inherited crypto is not taxed on receipt, only when you sell (30% flat tax)
- Your cost of acquisition for gifted/inherited crypto is the donor’s original purchase price; keep those records
- Wedding gifts of any value from any giver are exempt
- Estate planning for crypto requires a will, documented private key handover, and nominee registration on your exchange
