Crypto Gifts, Airdrops, Mining and Staking

Not every token is bought. Some arrive as a gift from a friend or a parent. Some are dropped into a wallet by a project. Some are produced by mining or earned by staking. The tax questions are the same each time: is the receipt itself income, and if so under which provision and at what value; and when the token is later sold, what is its cost? For gifts, the Act gives a clear answer. For airdrops, mining and staking, it gives much less. This guide sets out what the statute settles and says plainly where it does not.

Which Act applies

• Receipts and transfers up to 31 March 2026 (assessment year 2026-27 and earlier): the Income-tax Act, 1961. The relevant provisions are section 56(2)(x) for gifts, section 115BBH for the tax on transfer, and section 49(4) for cost.
• From 1 April 2026 (tax year 2026-27 onwards): the Income-tax Act, 2025. The relevant provisions are section 92(2)(m) with section 92(3) and (5), section 194(1) [Table: Sl. No. 4], and section 73(1) [Table: Sl. No. 17].

Gifts: what the statute settles

The charge on the recipient. Section 56(2)(x) taxes, as income from other sources, any property other than immovable property that a person receives from any person without consideration, where its “aggregate fair market value” exceeds Rs 50,000. If the threshold is crossed, “the whole of the aggregate fair market value” is taxed. Property received for an inadequate consideration is also caught, where the shortfall exceeds Rs 50,000. In that case the excess of fair market value over the consideration is taxed.

Virtual digital assets are included. For clause (x), “property” takes its meaning from clause (d) of the Explanation to section 56(2)(vii), “and shall include virtual digital asset”. The Finance Act, 2022 added those words. Section 92(5)(f) of the 2025 Act defines “property” as specified capital assets of the assessee, and item (x) of the list is “virtual digital asset”. Section 92(2)(m)(iii) then repeats the Rs 50,000 rule for property other than immovable property.

Two consequences follow from the wording:

1. The limit is an aggregate. Rs 50,000 is the total fair market value of all such property received in the year without consideration. A crypto gift is added to any jewellery, shares or other movable property received as gifts in the same year.
2. The asset must be a capital asset of the recipient. Section 92(5)(f) defines “property” as the listed capital assets “of the assessee”. The same follows from the Explanation to section 56(2)(vii). Tokens received as stock-in-trade fall outside this provision.

The exceptions. Section 56(2)(x) does not apply to receipts in the following cases. Section 92(3) of the 2025 Act carries the same list.

• from a relative;
• on the occasion of the individual’s marriage;
• under a will or by inheritance;
• in contemplation of the death of the donor;
• from a local authority;
• from or by certain registered charitable or religious institutions;
• by way of certain transactions not regarded as transfers;
• by a trust created solely for the benefit of relatives of the individual; and
• from such class of persons as may be prescribed.

A gift of crypto from a parent, spouse or sibling is therefore not taxed in the recipient’s hands, whatever its value. “Relative” is defined in the Explanation to section 56(2)(vii) and in section 92(5)(g).

Valuation. For section 56(2)(x), “fair market value” means the value determined under the prescribed method. Section 92(5)© of the 2025 Act says the same. Rule 57 of the Income-tax Rules, 2026 prescribes methods for section 92 for:

• jewellery;
• artistic works;
• quoted shares;
• unquoted shares; and
• other unquoted securities.

It has no entry for a virtual digital asset. The residuary entry in rule 57, “the price that such property would ordinarily fetch on sale in the open market”, is expressed to apply to section 26(2)(j) only, not to section 92. This guide did not find a method in the 2026 Rules prescribed for valuing a virtual digital asset received as a gift.

Cost when the gifted token is later sold. Where the recipient was taxed under section 56(2)(x), section 49(4) deems the cost of acquisition to be “the value which has been taken into account” for that clause. Section 73(1) [Table: Sl. No. 17] of the 2025 Act does the same for section 92(2)(m). Where the gift was exempt, for example from a relative, the cost is “the cost for which the previous owner of the property acquired it”. This is section 49(1)(ii) of the 1961 Act, and Sl. No. 1 of the section 73(1) Table in the 2025 Act.

Schedule VDA in the return follows the same rules. Its cost column says, “In case of gift; a. Enter the amount on which tax is paid u/s 56(2)(x) if any b. In any other case cost to previous owner”. The sale itself is then taxed at 30 per cent on the gain, as explained in Tax on Crypto and Other Virtual Digital Assets.

The donor. The donor receives no consideration. The 1 per cent TDS applies to “consideration for transfer” of a virtual digital asset (section 194S; section 393(1) [Table: Sl. No. 8(vi)]). Neither Act contains a provision that deducts tax on a gift as such.

Airdrops: not settled by the statute

An airdrop is a distribution of tokens to wallet holders, usually without any payment. The Act does not mention airdrops, and neither do the 2026 Rules. This search found no CBDT circular, instruction or FAQ on them in primary form, and no judgment on their income-tax treatment.

What the statute does provide is limited:

• Section 56(2)(x) and section 92(2)(m) reach property received “from any person” without consideration, above the Rs 50,000 aggregate. Whether a particular airdrop is a receipt “from any person”, and what its fair market value is when there may be no market, are not answered by the text. No prescribed valuation method covers it.
• On a later sale, section 115BBH(2)(a) allows a deduction for “cost of acquisition, if any”. The Act does not say what that cost is for a token that was never bought, unless it was taxed on receipt under section 56(2)(x) or section 92(2)(m).

Beyond this, the treatment of airdrops is not settled by the Act, by a circular or by a judgment.

Mining: not settled by the statute

Mining produces new tokens as a reward for validating transactions. No provision of either Act, and no rule, deals with mining by name. Section 56(2)(x) and section 92(2)(m) apply to property received “from any person”. Neither Act says whether a reward generated by a protocol is such a receipt. Neither Act sets out when the reward is income, under which head, at what value, or what the cost of the mined token is on a later sale. This search found no circular and no judgment on the point. The treatment of mining is not settled.

Staking: not settled by the statute

Staking earns further tokens for locking up tokens already held. Again, neither Act nor the 2026 Rules mention staking, and this search found no circular or judgment on its income-tax treatment.

Section 115BBH and Sl. No. 4 of section 194(1) apply to income “from the transfer of any virtual digital asset”. A reward received for staking is not, on the words, a transfer by the recipient. Whether staking rewards are taxable on receipt, under which head and at what value, is not settled by the Act, a circular or a judgment. The same is true of their cost on a later sale.

What is reported either way

Whatever view is taken of the receipt, a later sale of an airdropped, mined, staked or gifted token is a transfer of a virtual digital asset. It is reported row by row in Schedule VDA, with its date of acquisition, cost and consideration, as described in Reporting Crypto: Schedule VDA and the AIS. A sale on which tax is deducted also appears in the AIS through the deductor’s TDS statement.

The wider picture

Crypto exchanges now report to the department under section 509 of the 2025 Act and rules 241 to 244. Under rule 243(1)(e)(vii) and (viii), transfers to and by a user are reported “sub-divided by the transfer type known by the reporting crypto-asset service provider”. The obligation applies to users resident outside India. The rule does not name the transfer types. It does not decide how any such receipt is taxed.

Summary

1. A gift of crypto from a non-relative, outside the other exceptions, is taxed in the recipient’s hands as income from other sources where the year’s aggregate fair market value of gifted movable property exceeds Rs 50,000. The provisions are section 56(2)(x) and section 92(2)(m)(iii).
2. A gift from a relative, on marriage, or under a will or inheritance is not taxed on receipt.
3. On a later sale, the cost is the value taxed on receipt, or otherwise the previous owner’s cost. The gain is then taxed at 30 per cent.
4. No rule prescribes how a virtual digital asset received as a gift is valued.
5. The income-tax treatment of airdrops, mining and staking on receipt, and the cost of such tokens on a later sale, are not settled by the Act, a circular or a judgment.
6. Every later sale is reported in Schedule VDA.

This is the last guide in the crypto set. Tax on Crypto and Other Virtual Digital Assets is the place to start.