In India, staking rewards and airdrops are commonly treated as income when you receive them, and then taxed again at the flat 30% VDA rate when you later sell. Airdrops are generally taxed as income from other sources at their fair market value on the day you receive them. Staking rewards are generally taxed at your slab rate on receipt. When you sell either one, the gain is taxed at 30% under section 115BBH, with the amount already taxed as your cost.
Mined coins work differently: the common view is that their cost of acquisition is treated as zero, and electricity and hardware are not deductible. One honest warning before the detail. The core VDA rules are written into the Act, but much of the treatment of airdrops, staking and mining comes from practitioner guidance rather than a specific ruling. So read this as a map, and confirm your own case with a chartered accountant.
Why most Bitcoin holders rarely meet these
I will start with something I tell people at every meetup. If you buy Bitcoin, hold it, and maybe sell some of it one day, your tax life is fairly simple. You have purchases, you have sales, and the 30% rule applies to the gains.
Bitcoin has no staking. You cannot lock it up in the protocol and earn new Bitcoin for it. Airdrops are mostly a feature of newer tokens. Mining Bitcoin at home in India is rare for anyone who is not running serious hardware.
The people who run into these questions are usually the ones who wandered. They bought a token because a friend did, put it into a staking product, picked up an airdrop, and now have a year of small reward entries they never recorded. That is when the tax gets messy. Not because the rate is complicated, but because the records are.
Airdrops: income on receipt, 30% on sale
An airdrop is when a project sends tokens to your wallet for free, often to people who used a service or held a certain asset.
The commonly cited treatment in India has two steps:
- When you receive it: the fair market value on that day is taxed as income from other sources, at your slab rate.
- When you sell it: the gain is taxed at the flat 30% VDA rate, and the amount you were already taxed on counts as your cost of acquisition.
Here is a simple illustration with made-up numbers. Say a token worth ₹5,000 lands in your wallet. That ₹5,000 is treated as income from other sources at your slab rate. Six months later you sell it for ₹8,000. Your VDA income on the sale is ₹3,000, taxed at 30% plus cess, and 1% TDS can apply to the sale value.
The hard part with airdrops is the fair market value on the day of receipt. Many tokens have thin markets. Write down the value you used and where you got it, on the day it arrives.
Staking rewards
Staking means locking tokens into a network or a service to help run it, and receiving rewards in return. The rewards are new tokens.
The common treatment: rewards are taxed at your slab rate as income when you receive them. When you later sell the reward tokens, the gain is taxed at 30%.
Staking creates a record-keeping problem. Some services pay rewards daily. A year of daily rewards is 365 small income entries, each with its own date and value. If you cannot reconstruct them, you cannot work out either your income or your cost when you sell.
A related question people ask: is moving coins into a staking wallet a taxable transfer? There is no specific ruling for this. The practitioner view on moving coins between wallets you own is that it is not a sale, because there is no consideration and no change of owner. But a staking product may involve another party, and the details matter. This is a question for your CA, with the product's terms in hand.
Mining: cost is zero
For mined coins, the commonly cited position is that the cost of acquisition is treated as zero. When you sell, the whole sale value is your VDA income, taxed at 30%.
The part miners dislike: electricity, hardware and other running costs are not deductible against that income. Section 115BBH allows only the cost of acquisition as a deduction. No other expense or allowance. That follows from the rule written into the Act. How mining income is treated at the moment it is created, before any sale, is less settled, and depends on whether it is a hobby or a business. Ask your CA.
Why these are less settled
The VDA tax rules came in through the Finance Act 2022, which inserted sections 115BBH, 194S and 2(47A). They clearly cover the transfer of a VDA. They say far less about how you come to own a VDA in the first place when you did not buy it.
So the treatment of airdrops, staking and mining you read on tax websites, including the summary above, is mainly practitioner guidance built on general principles. It is a sensible reading. It is not the same thing as a circular or a court ruling. Two careful CAs can come to slightly different views, especially on business versus other income.
The Income-tax Act, 2025 has applied since 1 April 2026 and renumbers sections. The rules here are carried over in substance, but check the current numbering with your CA.
Gifts follow a different rule
People sometimes lump gifts in with airdrops, because both arrive for free. The tax rules are different.
Under section 56(2)(x), property received without consideration is taxed as income from other sources if its value exceeds ₹50,000 in a financial year, and the Finance Act 2022 added VDAs to what counts as property. Gifts from specified relatives and gifts on marriage are exempt. The value used is the fair market value when you receive it.
So if a friend gifts you Bitcoin worth ₹80,000, the whole ₹80,000 is taxable at your slab rate. The same gift from a parent is exempt. How the 30% tax and 1% TDS apply to the person giving the gift is not clearly settled. Our gifting Bitcoin page has the detail.
Where TDS fits in
TDS does not apply when an airdrop or a staking reward lands in your wallet. Nobody is paying you for transferring a VDA at that point. It applies later, when you sell. Then 1% of the sale value can be deducted under section 194S (now section 393 of the Income-tax Act, 2025), subject to the yearly thresholds, and you claim it in your return like any other TDS.
Record-keeping
This is where I would spend your energy. For each reward, airdrop or mined coin, keep:
- the date you received it
- the quantity
- the rupee value on that date and where the price came from
- the wallet or platform it arrived in
- the transaction ID, if it was on-chain
And when you sell, keep the sale date, sale value and fee. Every sale, swap and spend goes in Schedule VDA, including the small ones. Since 2026, platforms report transactions under the Crypto-Asset Reporting Framework, so your return should match what they report.
If this list feels like a lot of work for a handful of tokens, that is a fair reaction. Part of why I have always stayed with Bitcoin is that it keeps life simple: buy, hold, and keep a clean record of the few sales you ever make.
For the full picture, including TDS, losses and Schedule VDA, read our India crypto tax guide. If you hold coins in your own wallet, the self-custody and tax page covers the records to keep. General information only, not tax advice.
Common questions
Is airdrop income taxable in India?
The commonly cited treatment is that an airdrop is taxed as income from other sources at its fair market value on receipt, and a later sale is taxed at 30% with that value as cost. This comes from practitioner guidance, so confirm with a CA.
How is staking taxed in India?
Staking rewards are generally taxed at your slab rate when received, and any later sale of the reward tokens is taxed at the flat 30% VDA rate. Keep a dated record of every reward.
Can miners deduct electricity costs?
No. Section 115BBH allows only the cost of acquisition as a deduction, and the common view is that mined coins have a cost of zero. Electricity and hardware are not deductible against VDA income.
Is moving coins to a staking wallet taxable?
There is no specific ruling. Moving coins between wallets you own is commonly viewed as not a sale, but staking products can involve another party. Show your CA the product terms.