If you have ever thought about donating crypto to a cause you care about and assumed it will be deductible under Section 80G, you are not alone. Sadly, this assumption can cost you dearly. In India, cryptocurrencies and NFTs are classified as Virtual Digital Assets (VDA) under Section 2(47A) of the Income Tax Act, and donating them is treated as a transfer, not a gift.
This means, you may already owe capital gains tax on the appreciation. So what actually happens when you donate crypto in India, and when is Section 80G applicable? Read this guide to understand how crypto donations are taxed in India.
Key Takeaways
- Donating crypto is treated as a disposal of a VDA, triggering capital gains tax on any appreciation above your cost of acquisition.
- Under Section 115BBH, any gain on donated crypto is taxed at a flat 30% plus 4% health and education cess, regardless of how long you held the asset.
- Losses on donated crypto cannot be set off against any other income or carried forward to future years under Section 115BBH(2)(b).
- A Section 80G deduction is only available if the recipient charity is registered and the donation is made in INR, direct crypto donations may not qualify without conversion.
- Donating to foreign charities also does not qualify for Section 80G deduction, though capital gains tax on disposal still applies.
- Under Section 194S, 1% TDS may apply on the transfer value of donated crypto exceeding INR 10,000 (or INR 50,000 for specified persons).
- Budget 2026-27 introduced penalties of INR 200 per day for late VDA statements and INR 50,000 for incorrect filing, making accurate donation reporting more critical than ever.
- All crypto donation disposals must be reported under Schedule VDA in ITR-2 or ITR-3.
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How the ITD Taxes Crypto Donations In India?
Crypto donations are taxed differently depending on whether you are giving cryptocurrency to a cause or receiving it. Both sides of the transaction have their tax obligations under Indian law. Let’s break them down clearly.
Tax on Donating Crypto to a Domestic Charitable Trust
When you donate cryptocurrency in India, it is treated as a disposal of a VDA under Section 115BBH. The donation is considered a taxable event, and you must pay capital gains tax on the appreciation of token value. Regardless of how the charitable trust is registered, profits are taxed at a flat rate of 30%, along with a 4% health and education cess.
That being said, donation to a charitable organisation registered under Section 80G allows deductions in the ITR, when filing through the old tax regime. However, such deductions are only available when the donation is made in INR through a recognised banking channel.
So, if you donate crypto directly, without first converting it to INR, the donation may not qualify for deduction. Therefore, the safest approach is to sell the crypto, pay the applicable capital gains tax, and then donate the INR proceeds to the registered charity to preserve your deduction eligibility.
TDS on Crypto Donation
Additionally, a 1% TDS under Section 194S may apply if the donation value exceeds INR 10,000 (or INR 50,000 for HUFs and Individuals with business income less than INR 1 crore or professional income less than INR 50 lakhs) within a financial year. The platform or exchange facilitating the donation may deduct the TDS amount before completing the transaction.
Tax on Donating Crypto to an International Charitable Trust
If you donate crypto to a charity registered outside India, the Section 80G deduction is not available under any circumstances. The deduction applies exclusively to donations made to Indian-registered charitable organisations. The foreign registration of the recipient charity, regardless of its cause or credibility, does not satisfy the eligibility criteria under Indian tax law.
Hence, the tax obligations on your end remain fully intact. The donation is still treated as a disposal of a VDA and any appreciation above your cost of acquisition is taxed at a flat 30% under Section 115BBH, plus 4% health and education cess.
Additionally, 1% TDS under Section 194S applies on the transfer value exceeding INR 10,000 (or INR 50,000 for specified persons). If the International exchange doesn’t automatically deduct TDS, ensure that you report it to the ITD.
Important Thing To Note If the FMV of your crypto on the date of donation is lower than your cost of acquisition, the resulting loss cannot be set off against any other income or carried forward to future years under Section 115BBH(2)(b). You donate at a loss and receive no tax relief in return. |
Tax on Receiving Crypto Donation
If you receive cryptocurrency as a donation, the tax treatment depends on your relationship with the donor and the value of the received tokens. Crypto donations received from close family members are fully exempt from tax.
However, if you receive crypto from a non-relative, the total value is taxable as “Income from Other Sources” under Section 56(2) of the Income Tax Act, if it exceeds INR 50,000 in a financial year. The entire value of the crypto received is added to your total income and taxed according to your applicable income tax slab rate.
Tax on Receiving Crypto Donation by Charitable Organizations
Charitable trusts or non-profits that are registered under Sections 12A and comply with the guidelines for receiving donations (often covered under provisions like Section 80G) can accept crypto donations without those funds being taxed as income. This scheme is designed to encourage philanthropic giving and ensure that the donation goes entirely toward the charitable cause.
However, the organisation must adhere to strict reporting requirements to maintain its tax-exempt status. Both the donor and the receiving charity must follow proper procedures to avail the benefits; otherwise, the donation might attract tax liabilities.
How To Calculate Crypto Donation Tax in India?
Here is how you calculating taxes on donating crypto in India:
Step 1: Calculate Capital Gains on Crypto Donations
When you donate cryptocurrency, you must calculate your capital gain based on the difference between your acquisition cost and the fair market value on the date of donation.
Here’s the formula:
Capital Gains = Fair Market Value on Date of Donation – Cost of Acquisition |
Step 2: Calculate TDS
Additionally, a 4% health and education cess is applied on the tax amount. If the value of the donation crosses INR 10,000 or INR 50,000 in some cases during the financial year, a 1% TDS may also be deducted by the platform handling the transaction
TDS = 1% × Total Transaction Value |
Calculating Tax on Receiving Crypto as Donation
Here is how you calculate tax on receiving crypto donations in India:
Step 1: Calculate Tax on Receiving Crypto Donations
If you receive cryptocurrency as a donation and it comes from a non-relative, you must check if the total value of all such gifts during the financial year exceeds INR 50,000. If it does, the entire value becomes taxable under “Income from Other Sources.”
Here’s the formula:
Taxable Income = Number of Tokens Received × Fair Market Value of Crypto Received |
This taxable amount is added to your total income for the year and taxed according to your applicable slab rate. If a 1% TDS was deducted by the donor, you can claim this amount as a credit while filing your Income Tax Return.
Step 2: Calculate TDS
Additionally, a 4% health and education cess is applied on the tax amount. If the value of the donation crosses INR 10,000 or INR 50,000 in some cases during the financial year, a 1% TDS may also be deducted by the platform handling the transaction
TDS = 1% × Total Transaction Value |
Real-Life Example:
A user on Reddit channel, r/BitcoinIndia, raised a question that many generous crypto holders quietly wonder about:
“Let’s just say that I bought some crypto when it was cheap and now they’ve 20x’d. If I sell them, I have to pay capital gains.
But let’s just say that I’m moved by my friend’s cause for the well being of the people and donate all my cryptos to his organization, would I still be liable to pay the capital gains? I don’t have ownership of my cryptos anymore.”
The answer is yes, donating crypto does not eliminate your capital gains liability. The moment you transfer ownership, a taxable disposal has occurred per Indian tax law. The numbers below show exactly what that looks like.
Assumptions:
To keep the math clear and grounded, we will use the following figures:
- Crypto donated: 10,000 MATIC (Polygon)
- Original cost of acquisition: INR 10 per MATIC
- FMV of 1 MATIC on date of donation: INR 200
- Recipient: A friend’s NGO (not registered under Section 80G)
We are assuming 10,000 MATIC donated at INR 200 because it reflects a realistic 20x appreciation scenario, exactly as described by the user. Similarly, we’re assuming that the NGO is not Section 80G-registered, as this is common for smaller or newer organisations. This means no deduction will be available to the donor.
Step 1: Calculate Capital Gains on Donation
When the 10,000 MATIC tokens are donated, the transfer is treated as a disposal at FMV on the date of donation. The cost of acquisition is the original purchase price.
Capital Gain = FMV at Donation − Cost of Acquisition
Capital Gain = (10,000 × INR 200) − (10,000 × INR 10)
Capital Gain = INR 20,00,000 − INR 1,00,000 = INR 19,00,000
Step 2: Calculate Tax on Capital Gains
Under Section 115BBH, the entire gain is taxed at a flat 30% regardless of how the crypto was disposed of.
Capital Gains Tax = 30% × INR 19,00,000 = INR 5,70,000
Cess = 4% × INR 5,70,000 = INR 22,800
Total Tax on Donation = INR 5,70,000 + INR 22,800 = INR 5,92,800
Step 3: Check Section 80G Deduction Eligibility
Since the recipient NGO is not registered under Section 80G, no deduction is available. Even if it were registered, the donation would need to be made in INR, not directly in MATIC, to qualify for the deduction. In this case, the donor bears the full tax cost with no offsetting deduction benefit.
Step 4: Account for TDS Under Section 194S
Since the total donation value of INR 20,00,000 far exceeds the INR 10,000 threshold, 1% TDS is applicable.
TDS = 1% × INR 20,00,000 = INR 20,000
This TDS is adjustable against the donor’s final tax liability when they file their ITR.
How to Report Crypto Donation Taxes in India?
Reporting crypto donation taxes correctly requires you to treat each donation as a disposal event, not a charitable transfer. Capital gains arising from the donation must be declared under Schedule VDA, while any eligible Section 80G deduction must be claimed separately under the deductions head. Confusing the two is one of the most common errors donors make when filing.
Step 1: Compile All Donation Records
Before you begin filing, gather a complete record of every crypto donation made during the financial year. You will need:
- Date and INR value of every crypto donation made
- The FMV of each donated token on the exact date of donation
- Your original cost of acquisition for each donated asset
- Recipient charity details, name, registration number, and Section 80G status if applicable
- Platform or wallet transaction records confirming the donation transfer
- TDS certificates or exchange statements where TDS was deducted
Step 2: Calculate Capital Gains on Each Donation
For every crypto donation, calculate the gain or loss as the difference between the FMV on the date of donation and your original cost of acquisition. Even if you received no sale proceeds, this disposal is taxable under Section 115BBH at 30% plus 4% cess on any gain. Losses cannot be set off or carried forward.
Step 3: Choose the Correct ITR Form
Step 4: Fill Schedule VDA and Claim 80G Deductions
Within your chosen ITR form, complete both relevant sections:
- Under Schedule VDA, enter each donation as a disposal event, with the date of acquisition, date of donation, cost of acquisition, FMV at donation, and the resulting gain.
- Under Chapter VI-A Deductions, claim your Section 80G deduction only if the donation was made in INR to an Indian-registered 80G charity. Direct crypto donations without INR conversion do not qualify.
Step 5: Reconcile Your TDS Credits
Cross-check all TDS deducted on your donation transfers against your Form 26AS and Annual Information Statement (AIS). For donations made to foreign charities or via decentralised wallets where TDS was not auto-deducted, ensure you have self-reported correctly.
Step 6: Pay Any Remaining Tax and File
Settle any outstanding tax liability as self-assessment tax before submitting your return. Budget 2026-27 has introduced a penalty of INR 200 per day for late VDA transaction statements and INR 50,000 for incorrect filing. Ensure all donation disposals are fully declared to avoid scrutiny under the Income Tax Act.
Tracking the FMV of donated tokens, calculating gains, and reconciling TDS across multiple charities and wallets can be challenging. KoinX can simplify this process, and here is how it can help.
How Can KoinX Help With Crypto Donation Tax in India?
Handling crypto donations manually can become confusing, especially when you need to track fair market values, capital gains, and TDS deductions. KoinX simplifies the entire process for Indian crypto users. Here’s how it helps you stay compliant with donation-related taxes:
Accurate Preview of Capital Gains
KoinX gives you an accurate preview of your capital gains when you donate cryptocurrency. By using real-time market data, it calculates how much profit you have made since you acquired the crypto, helping you estimate your capital gains tax liability even before you make the donation.
Auto-Classification of Transactions
All your donation transactions are automatically classified by KoinX under the correct categories. This ensures that donation disposals and income from received crypto gifts are recorded separately, avoiding confusion during tax filing. You do not need to manually label or adjust each transaction.
Reliable Tax Reports
The platform generates reliable tax reports that reflect your crypto donation activities accurately. These reports include your capital gains from donations, taxable income from received gifts, and TDS deductions. You can easily use these reports to file your Income Tax Return or share them with your accountant for faster compliance.
Portfolio Insights
With KoinX, you get a full view of your crypto portfolio, including donations made and donations received. You can track how each transaction affects your total holdings and plan your future donations or asset disposals better. Clear insights help you make informed financial decisions.
Advanced Assistance from Experts
If you are unsure about handling crypto donation taxes, the software connects you with India’s best crypto tax experts. They can help you accurately report crypto disposals, claim TDS deductions, and manage any complex filing requirements related to donated cryptocurrencies.
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Conclusion
Donating cryptocurrency is a generous act, but in India, it comes with clear tax responsibilities. Whether you are giving or receiving crypto, you must calculate taxes correctly and report them based on fair market values. Staying compliant with Indian tax laws ensures that your donations do not create unexpected tax problems later.
If you want to simplify crypto donation taxes and file error-free returns, KoinX is the perfect solution. Join KoinX today and manage your crypto taxes with complete confidence.
Frequently Asked Questions
Can I Claim A Tax Deduction For Donating Crypto In India?
No, you cannot claim a tax deduction for donating cryptocurrency in India. Under current tax laws, only donations made through banking channels or in cash (up to INR 2,000) are eligible for deductions under Section 80G. Crypto donations are treated as asset disposals and are subject to capital gains tax instead.
Is There A Minimum Limit For Crypto Donation Taxation?
There is no minimum limit for taxation when you donate cryptocurrency. Even small donations are considered disposals of virtual digital assets and must be reported for capital gains tax. However, the 1% TDS deduction only applies if the transaction value crosses INR 50,000 in a financial year.
What Happens If I Donate Crypto With A Loss?
If you donate cryptocurrency whose value is lower than your original acquisition cost, you still cannot claim a loss under Indian tax laws. Section 115BBH does not allow setting off losses from virtual digital assets against other income. Only gains are taxed, and losses from donations cannot be adjusted.
Can Charitable Trusts Accept Crypto Donations In India?
Yes, charitable trusts and non-profit organisations registered under Section 12A can accept crypto donations in India. If the organisation complies with regulatory guidelines, donations received are not treated as taxable income. However, the organisation must maintain proper records of donations and follow disclosure requirements for compliance.
Do I Need To Report Crypto Donations Received From Family?
If you receive cryptocurrency donations from close family members like parents, siblings, or spouse, you do not need to pay tax on them. These gifts are fully exempt from tax, regardless of the amount. However, it is advisable to keep documentary proof showing the relationship and the details of the transaction.
