If you stake ETH or SOL, or a free token lands in your wallet, India’s tax system usually sees two events, not one. The first is when the tokens arrive. The second is when you sell, swap or spend them. The rates differ, and the link between the two, your cost basis, is the part the law never wrote down.
Event one: the day the tokens arrive
The dominant view among Indian chartered accountants is that staking rewards, mining output and airdrops are income in the year you receive them, valued at their rupee fair market value on that date, and taxed at your normal slab rate under “income from other sources”, not at the flat 30% crypto rate. That is the position set out by AVS & Associates and Harun Raaj & Associates. Someone who runs validators as a business may instead report it as business income.
Airdrops have one extra wrinkle. A crypto asset received for nothing can fall under the gift rule, which taxes receipts from non-relatives once their total value crosses ₹50,000 in a year, as this summary of the 2025 Act notes. We covered how that threshold works for gifted bitcoin in our crypto gift tax explainer.
Event two: the day you sell
Here the law is clear. Selling, swapping or spending the tokens is a transfer of a virtual digital asset, taxed at 30% plus 4% cess (31.2%). Under the Income-tax Act, 2025, in force since 1 April 2026, the only deduction allowed is “cost of acquisition, if any”. Exchange fees and gas don’t count, and a loss can’t be set off against anything or carried forward. The 1% TDS also applies when you sell on an exchange.
The unsettled question: what did those tokens cost you?
The words “if any” are the problem. You paid nothing for a staking reward. CAs mostly argue that the rupee value already taxed on receipt should become your cost, so the second tax hits only the later rise. But the Act doesn’t say so for crypto, and Harun Raaj notes that the CBDT had issued no specific guidance on staking, mining or airdrops as of August 2026. A strict reading gives a cost of nil.
BtcMedia’s worked example: ₹1 lakh of staking rewards
Assume (example figures) you are in the 30% slab, receive staking rewards worth ₹1,00,000 on the days they land, and later sell them for ₹1,20,000. Cess of 4% is included throughout.
| Step | Cost basis = receipt value | Cost basis = nil |
|---|---|---|
| Tax on receipt (₹1,00,000 at 31.2%) | ₹31,200 | ₹31,200 |
| Taxable gain on sale | ₹20,000 | ₹1,20,000 |
| Tax on sale at 31.2% | ₹6,240 | ₹37,440 |
| Total tax | ₹37,440 | ₹68,640 |
| Share of the ₹1,20,000 sale | 31.2% | 57.2% |
The gap is ₹31,200, exactly the tax already paid on receipt. Under the nil reading, the same ₹1 lakh gets taxed twice. In a lower slab the receipt tax shrinks (₹20,800 at the 20% slab with cess), but the sale side doesn’t change, because it is always 31.2%.
You can rerun the sale side with your own numbers in our crypto tax calculator for India, and the crypto ITR checklist covers where each event goes on the return. For live prices, see Ethereum’s price page.
What it means for Indian investors
- Record the rupee value of every reward on the day it arrives. That figure is both your income for the year and the cost basis you will want to claim later. Rebuilding it from memory at filing time is where mistakes start.
- Report the receipt and the sale separately. Receipt goes under income, and the sale goes in Schedule VDA, as Mint explains.
- Ask your CA which cost-basis view they take, in writing, before you file. On a large staking balance, the difference runs into lakhs.
BtcMedia verdict: staking in India is not “free yield”. After two layers of tax, a 30%-slab staker keeps roughly 69 paise of each rupee of sale proceeds even under the friendlier reading, and only about 43 paise under the strict one (on our example). Price that in before comparing a staking yield with an FD.
FAQ
Are staking rewards taxed at 30% in India? Usually not on receipt. Practitioners treat them as income at your slab rate when received. The flat 30% plus cess applies when you later sell, swap or spend them.
Is an airdrop taxable if I never sell it? Most CAs say yes, at its rupee value on the day received, and the gift rule’s ₹50,000 threshold may also apply. There is no CBDT circular, so confirm with a CA.
Can I deduct gas or exchange fees on the sale? No. Only cost of acquisition is deductible on a crypto transfer under the 2025 Act.
How we calculated this: example amounts of ₹1,00,000 received and ₹1,20,000 sold, 30% slab plus 4% cess, flat 30% plus 4% cess on the sale; rules per the Income-tax Act, 2025 and the CA sources linked above, checked 30 October 2026, 12:45 AM IST.
This is general information, not tax or financial advice. Rules on staking and airdrops are not settled; speak to a qualified chartered accountant before filing.