Crypto airdrops often feel like unexpected gifts, free tokens landing directly in your wallet without you making a purchase. They are usually promotional strategies by new blockchain projects, aiming to boost awareness and reward early supporters. Although you do not pay for airdrops, they still hold real financial value once they reach your wallet.
However, receiving free tokens does not mean you can skip the tax responsibilities. In India, airdropped cryptocurrencies are treated as taxable income at the time of receipt and may also attract capital gains tax when sold later. This guide will walk you through how airdrops are taxed in India, how to calculate your tax obligations, and when certain airdrops might be exempt from taxation.
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Read More: Crypto Tax Guide India
How Are Crypto Airdrops Taxed In India?
Receiving free crypto through airdrops might feel like a bonus, but the Indian tax system considers it a taxable event. You need to understand two key tax obligations related to airdrops: income tax when you receive the tokens and capital gains tax when you sell them later.
Receiving Crypto Airdrops
When you receive tokens through an airdrop, they are treated as “Income from Other Sources” under the Indian Income Tax Act. The Fair Market Value (FMV) of the tokens on the day you receive them must be added to your total taxable income for that financial year. The income will be taxed according to your applicable slab rate, even if you do not immediately sell the tokens.
It is important to note that airdropped tokens are taxable at the time of receipt, regardless of whether they hold immediate liquidity or are sold later.
Disposal Of Airdropped Tokens
When you later sell, swap, or spend your airdropped tokens, any profit made is subject to capital gains tax. The gain is calculated as the difference between the FMV at the time of receipt and the selling price.
Capital gains from airdropped tokens are taxed at a flat 30% rate, along with a 4% health and education cess.
Additionally, if the transaction value crosses INR 10,000 (or INR 50,000 in some cases), a 1% TDS will be deducted by the buyer at the time of sale by the crypto exchange or platform.
How To Calculate Crypto Airdrop Taxes In India?
Calculating your tax obligations for airdropped tokens involves two main steps: determining the income tax at the time you receive the airdrop and calculating the capital gains tax when you eventually sell the tokens. Let’s break it down clearly.
Calculating Income from Airdrops
When you receive tokens through an airdrop, you need to determine their Fair Market Value (FMV) in Indian Rupees (INR) on the date of receipt. This FMV must be added to your total income under “Income from Other Sources.”
Here’s the simple formula:
Taxable Income = FMV of airdropped tokens at the time of receipt |
Example
Rahul participates in a blockchain community event and receives 100 free tokens of a project called “EtherSprint” through an airdrop. On the day he receives the tokens, the Fair Market Value (FMV) of 1 EtherSprint token is INR 50.
First, Rahul calculates his income from the airdrop:
Taxable Income = Number of Tokens × FMV at Receipt |
Taxable Income = 100 × INR 50 = INR 5,000
This INR 5,000 is added to Rahul’s total income under Income from Other Sources and taxed based on his applicable slab rate.
Read More: Different ITR Forms Available in 2025
Calculating Capital Gains from Airdropped Tokens
When you sell your airdropped tokens later, the capital gain is the difference between the sale price and the FMV recorded at the time of receipt.
Here’s the simple formula:
Capital Gains = Sale Price – FMV at the time of receipt |
Example
Six months later, Rahul decides to sell all 100 EtherSprint tokens. At the time of sale, the FMV of 1 token has increased to INR 100. Now, he calculates the selling price:
Selling Price = Number of Tokens × Sale Price per Token |
Selling Price = 100 × INR 100 = INR 10,000
Next, Rahul calculates his capital gain:
Capital Gain = Selling Price – FMV at Receipt |
Capital Gain = INR 10,000 – INR 5,000 = INR 5,000
Now, Rahul’s tax on the capital gain will be calculated as:
- Flat 30% Capital Gains Tax = 30% of INR 5,000 = INR 1,500
- 4% Health and Education Cess = 4% of INR 1,500 = INR 60
Thus, the total capital gains tax Rahul needs to pay is:
Total Tax Payable by Rahul = INR 1,500 + INR 60 = INR 1,560 |
Additionally, when Rahul sells his tokens, the exchange will deduct 1% TDS on the sale value:
TDS = 1% of INR 10,000 = INR 100
Rahul can later claim this TDS when filing his tax return if he does not have any tax liabilities.
Read More: How Are Crypto Gains Taxed In India?
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When Are Crypto Airdrops Not Taxed In India?
While most crypto airdrops are taxable in India, there are a few special situations where you might not have to pay taxes immediately. Let’s take a closer look at these exceptions.
Airdrops with Zero Fair Market Value
If the airdropped tokens have no established market value at the time you receive them, they may not attract any income tax. In this case, the tax authorities may consider the value as zero for income reporting purposes. However, if the token gains value later and you sell it, you will still need to pay capital gains tax based on the value at the time of sale.
Total Value of Airdrops and Crypto Gifts Below INR 50,000
Under Indian tax laws, if the combined value of all crypto gifts and airdrops you receive in a financial year is less than INR 50,000, you do not have to pay any income tax on them. This exemption only applies if the total value remains below the threshold. If the combined value crosses INR 50,000, the entire amount becomes taxable, not just the excess.
How Can KoinX Help With Airdrop Taxes In India?
Handling airdrop transactions manually can be tricky, especially when you need to track fair market values and calculate taxes properly. KoinX simplifies the entire process for you. Here’s how KoinX can help with managing your airdrop taxes in India:
Accurate Preview of Capital Gains
KoinX gives you a complete preview of your potential capital gains from airdropped tokens. You can view the changes in token value from receipt to sale, helping you plan the best time to dispose of your assets. This accurate preview ensures there are no surprises when you calculate your crypto taxes at the end of the financial year.
Auto-Classification of Transactions
Tracking different types of crypto transactions can get messy, but KoinX makes it easy. It automatically classifies all your transactions, including airdrops, trades, and gifts. This means you can quickly view your income and capital gains separately without manually sorting through thousands of transactions, saving you time and reducing errors.
Reliable Tax Reports
With KoinX, you can generate detailed and reliable tax reports that are tailored to Indian crypto tax rules. These reports cover your airdrop incomes, sales, and capital gains accurately. You can easily use these reports to file your Income Tax Return (ITR) or share them with your chartered accountant without worrying about missing any important transaction details.
Advanced Assistance from Experts
If you face any confusion about how to report your airdrop earnings or deal with complex tax situations, KoinX provides expert support. You can get assistance from India’s leading crypto tax experts to help you file your ITR, manage TDS compliance, and resolve tricky tax challenges quickly and accurately.
Make your crypto airdrop taxation hassle-free — get started with KoinX today and take charge of your crypto finances with confidence!
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Conclusion
Crypto airdrops are an exciting way to expand your portfolio, but they come with clear tax responsibilities in India. From the moment you receive the tokens, you must be prepared to report their fair market value as income and later handle capital gains taxes if you sell them.
Staying compliant with these rules is important to avoid penalties. Using tools like KoinX can help you simplify tax calculations, manage your portfolio better, and stay ahead with your crypto tax obligations.
Frequently Asked Questions
Do I Pay Tax If I Receive Airdrops Without Claiming Them?
Yes, you may still have a tax liability even if you do not claim the airdropped tokens. As per Indian tax laws, if tokens are credited to your wallet and are accessible, they are treated as income from other sources. The fair market value on the date of receipt must be included in your taxable income.
Are Airdrops Received From Foreign Projects Taxable In India?
Yes, airdrops received from foreign crypto projects are also taxable for Indian residents. The source of the airdrop does not change the tax treatment. You must declare the fair market value of the tokens as income, and if you later sell the tokens, capital gains tax will also apply.
Is There A Time Limit To Pay Taxes On Airdrop Rewards?
Yes, taxes on airdrop rewards must be reported and paid when filing your Income Tax Return (ITR) for the financial year in which you received the airdrop. Delays in filing or paying taxes can result in penalties and interest charges under Indian tax laws, so timely compliance is essential.
What Happens If I Receive Multiple Airdrops In A Year?
If you receive multiple airdrops within a financial year, the fair market value of each must be added to your income. If the total combined value exceeds INR 50,000, the entire amount becomes taxable. Each airdrop must be reported separately based on its receipt date and value for accurate tax filing.
