When a parent or relative dies holding bitcoin, the first question families ask is whether the coins are taxed on the way to the heir. In India they are not. The bill arrives later, when the heir sells, and its size depends almost entirely on one thing most families never think to keep: the dead owner’s purchase records.
Receiving crypto by inheritance: no tax
India has no inheritance or estate tax. Under the gift rules that cover virtual digital assets (VDAs), property received under a will or by inheritance is one of the listed exemptions, so the heir has nothing to pay or report on the day the coins arrive. Tax guides such as KoinX and Finnovate describe the same treatment.
This is different from a gift from a non-relative, where crypto worth more than ₹50,000 in a year is taxed as income. We covered that line in our crypto gift tax explainer.
Selling inherited crypto: 31.2% on the original owner’s gain
The sale is a normal VDA transfer. The gain is taxed at a flat 30% plus 4% cess, which is 31.2% for most people, with no deduction except the cost of acquisition and no long-term discount, however long the family held the coins.
The key point is which cost counts. Section 49(1) of the Income-tax Act, 1961 says that where an asset came to you “under a gift or will” or “by succession, inheritance or devolution”, its cost is “deemed to be the cost for which the previous owner of the property acquired it” (Income Tax Department text). Guides including Fiscal Zenith say the same previous-owner rule continues under the Income-tax Act, 2025, which applies from 1 April 2026 with new section numbers. Our old-to-new section map tracks those changes. Finnovate notes that official guidance on inherited VDAs specifically is thin, so confirm your case with a tax professional.
So the heir does not get a fresh cost at the date of death. The original owner’s gain passes down with the coins.
The BtcMedia math: what records are worth
Example figures, for illustration only: a parent bought 0.1 BTC for ₹3,00,000. The heir later sells it for ₹6,50,000. Here is the tax under three ways of handling the cost.
| Scenario | Cost used | Taxable gain | Tax at 31.2% |
|---|---|---|---|
| Records kept: parent’s ₹3,00,000 cost proved | ₹3,00,000 | ₹3,50,000 | ₹1,09,200 |
| No records: cost can’t be shown | ₹0 | ₹6,50,000 | ₹2,02,800 |
| Wrong method: value on date of death (₹5,00,000) | ₹5,00,000 | ₹1,50,000 | ₹46,800 |
Missing records cost this family ₹93,600 more than the correct figure. The third row looks cheapest, but it under-reports ₹2,00,000 of gain and ₹62,400 of tax. Under section 270A of the 1961 Act, the penalty for under-reported income is 50% of the tax on it, which would be another ₹31,200 before interest.
On the sale itself, the exchange deducts 1% TDS, here ₹6,500, against the heir’s PAN. In the correct case the heir owes ₹1,02,700 more when filing. Use our crypto tax calculator and TDS calculator to run your own numbers.
What it means for Indian investors
If you hold crypto, the cheapest thing you can leave your family is a paper trail: exchange statements, purchase dates, amounts in rupees and wallet addresses, kept where someone will find them. If a record shows only a date and quantity, our crypto price on date tool can help reconstruct an approximate rupee price, though a real statement is stronger evidence.
If you are the heir, ask the exchange’s support team for its deceased-account procedure before trying to log in, and keep the documents that prove you received the coins by will or succession rather than by purchase. When you sell, report it in Schedule VDA of your own return. A loss on these coins can’t be set off against other income, as our loss set-off guide explains.
BtcMedia verdict: inheritance itself is tax-free, but the original owner’s records decide whether the heir pays the right tax, too much, or a penalty.
How we calculated this: tax at 30% plus 4% cess on sale value minus the stated cost; TDS at 1% of sale value; penalty at 50% of under-reported tax; example figures are illustrative, not market prices.
FAQ
Do I pay tax when I inherit bitcoin in India? No. Crypto received under a will or by inheritance is exempt when received. Tax applies only when you sell or transfer it.
What is the cost of inherited crypto for tax? The price the original owner paid, under the previous-owner rule in section 49(1) of the 1961 Act, not the value on the date of death.
Is 1% TDS deducted when I sell inherited crypto? Yes. The sale is a normal VDA transfer, so the exchange deducts 1% TDS, which you claim against your final tax.
This article is for information only and is not financial or tax advice. Rules for inherited VDAs have little specific official guidance; consult a qualified tax professional.