Crypto Tax In India: What Does This Mean For International Donations?

Since 2022, India has implemented a strict tax approach on cryptocurrencies, but what about international gifting? Much remains unclear, especially for non-residents, such as Non-Resident Indians (NRIs), who could face unexpected tax liabilities when receiving cryptocurrencies as gifts.

Latest Tax Rules for Crypto Usage in India

With the Union Budget 2022, crypto assets in India are now surrounded by a tax framework. All profits from the sale, exchange or use of these types of assets attract a uniform tax rate of 30%. You cannot deduct any expenses except the initial purchase cost. This regulation applies to both fiat and crypto transactions and also if you crypto used to pay for goods or services.

In addition, a mandatory withholding tax of 1% per transaction applies. This applies even if you make a loss on those transactions. From the 2025-2026 tax period, every platform that facilitates such transactions must report them in detail.

Domestic crypto gifts above INR 50.000 are taxed at the rate of 30%, including so-called airdrops. Income from mining considered regular income and taxed at the standard rate.

Foreign donations pose a fiscal conundrum

While the rules within India are clear, the tax treatment of international crypto gifts remains murky. The current legal framework offers little guidance for gifts to Indians living outside India, such as NRIs. The Income Tax Act suggests that such gifts are also taxable, but offers no concrete guidance on implementation.

This lack of clarity can have adverse tax implications for both the giver and the recipient, and potentially slows the global adoption of cryptocurrencies for sending value across borders.

Solutions needed for a more transparent crypto world

It’s clear that India has its tax rules for crypto in order domestically, but there is still a lot of confusion when it comes to international transactions. This lack of clarity could make users reluctant to use crypto for cross-border transactions. More clarity is essential to build trust and drive cryptocurrency adoption, especially if India has any ambition to become a truly digital economy.

Remember, a gift tax may not be the most fun gift to receive!

Frequently Asked Questions

What is the tax rate on crypto profits in India?

The tax rate is 30%, excluding the original purchase costs which are deductible.

Are there any special rules for international crypto gifts?

There are currently no specific rules or guidelines, leading to uncertainty in international transactions.

What happens if I receive crypto as a gift?

In India, crypto gifts above INR 50.000 attract a 30% tax irrespective of whether it is domestic or international.