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Under Indian income-tax law (Finance Act 2022 onwards), 'virtual digital assets' (VDAs) — including cryptocurrency and NFTs — are taxable. Transfers attract 30% tax on gains plus 1% TDS on transactions above specified thresholds.
Cryptocurrency is not banned in India but is not recognised as legal tender. Trading through registered exchanges is legal.
Succession of cryptocurrency is not specifically addressed in the Indian Succession Act. It falls under general succession law as movable property.
On death, cryptocurrency is inheritable like any other movable asset — through Will (testate) or intestate succession rules based on the deceased's personal law.
Self-custody wallets (MetaMask, Ledger, Trezor, self-hosted software wallets): the private key or seed phrase controls the wallet. There is no recovery mechanism — if the seed phrase is lost or unavailable to your heirs, the crypto is permanently inaccessible.
Exchange holdings (WazirX, CoinDCX, Binance, Coinbase): custody is with the exchange. On the account holder's death, the exchange has a succession process — the heir must produce the death certificate and legal documentation to gain access.
The mechanics differ substantially. Self-custody demands proactive access management; exchange holdings demand proper account documentation.
The private key or seed phrase is the only way to access self-custody wallets. If you die without communicating this to anyone your heirs can reach, the crypto is lost forever.
Common approaches:
Paper backup in a secure location (fireproof safe, bank locker) with instructions for heirs to find it.
Password manager with the seed phrase encrypted, with heirs having access to the password manager's master password.
Multi-signature wallets requiring multiple keys, with keys held by different family members.
Third-party escrow services that release seed phrases on verified death.
Never store the seed phrase in your Will (which becomes public during probate) or in unencrypted digital form.
Each exchange has its own succession process. Typical requirements:
Death certificate.
Copy of the deceased's Will (or Succession Certificate / LoA if intestate).
Legal heir affidavit or family tree affidavit.
Identity proof of the claimant heir.
Bank account details for transferring funds (if the exchange supports fiat withdrawal).
Processing timelines vary — some Indian exchanges take 2-4 weeks; international exchanges can take 2-6 months.
Some exchanges have specific policies about whether crypto can be transferred to the heir's exchange account (typical) versus withdrawn to a private wallet (usually not directly).
List your crypto holdings by exchange and by self-custody wallet. Include account identifiers (not passwords). Update annually.
Name a beneficiary for crypto specifically, or direct crypto into the residuary sweep. For substantial holdings, a specific beneficiary designation is clearer.
Reference (without disclosing) a separate 'digital assets access document' where actual access instructions live.
For heirs unfamiliar with crypto, direct that a specialist advisor be engaged for the transmission process — some estates have permanently lost value because heirs did not understand how to claim it.
India has no inheritance tax. Receipt of crypto by an heir is not itself taxed.
Subsequent sale by the heir triggers 30% tax on gains under Section 115BBH.
Cost basis for the heir: the deceased's original cost basis (not FMV at death). This is disadvantageous compared to real estate where step-up in basis applies.
For substantial crypto inherited, plan the sale timing carefully. The 30% flat rate applies regardless of holding period.
Inventory: all exchanges, all wallets, approximate value per holding. Update annually.
Access document: seed phrases, exchange login credentials, 2FA backup codes. Stored securely.
Communication: at least one family member or executor knows the existence and general access instructions (not the specific credentials).
Will: references crypto holdings, names beneficiary or directs to residuary, references access document.
Advisor: identify a crypto-familiar advisor who can guide your executor if you die suddenly.
Estimates suggest millions of dollars of cryptocurrency are permanently lost each year because the holders die without communicating access instructions.
This is not just about you — it is a family legacy question. Your heirs' inheritance depends on your access management now.
Set aside 2 hours this month to organise your crypto access. Create the access document, communicate its existence and location to your executor, and reference it in your Will.
Cryptocurrency succession combines legal, technical, and communication challenges. The Will addresses only part of the problem — access management is the technical layer that no legal document can substitute for.
For substantial crypto holdings, work with an advocate familiar with digital-asset succession. This is Personalised Will (₹25,000) minimum, and often benefits from Succession Planning (₹1,00,000) engagement for coordinated tax planning.
This is general legal information, not legal advice. For your specific situation, consult a Law Tarazoo advocate.
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