INTRODUCTION
Non-fungible tokens or NFTs are becoming more than just a catchphrase within the digital communities; they are now shaping ideas of ownership, value, and inheritance in the 21st century. What was earlier viewed as a novel way to buy and sell digital art has grown to represent a valuable digital asset that raises important questions, especially regarding inheritance and property rights. Since the Indian legal frameworks are still adapting to the realities of blockchains, NFTs remain hanging in a space that is both uncertain and deeply significant for the generations ahead.
This blog explores the functioning of NFTs as digital heirlooms, their standing in the Indian legal system, the challenges of managing their transfer after death, and the complex relationship between owning an NFT and owning the copyright to the work it represents. Also, providing the key practices that future beneficiaries shall abide by when inheriting such digital assets.
NFTs: MORE THAN JUST DIGITAL ARTWORK
NFTs are special digital tokens that are stored on blockchains, each token representing exclusive ownership of a particular digital item, be it a digital painting, music track, piece of virtual real estate, or even a game collectible. Contrary to cryptocurrencies such as Bitcoin, which are identical and interchangeable, NFTs are non-fungible, meaning each holds a singular value, like a one-of-a-kind heirloom. This singularity and distinctiveness provide NFTs with considerable emotional and monetary value, aligning with becoming digital heirlooms passed down through generations. Though the physical heirlooms, such as jewellery, property, or paintings, are passed down through wills, whereas NFTs are digitally allocated and are only accessible through private passwords or keys. This digital nature brings forth a unique complexity and challenge when considering inheritance.
LEGAL RECOGNITION IN INDIA
A Historic Supreme Court Judgement
The Supreme Court of India paved the way for formal recognition of NFTs as assets when it struck down the Reserve Bank of India’s blanket ban on cryptocurrency exchanges in the landmark judgement, Internet and Mobile Association of India v Reserve Bank of India.[1] Although NFTs were not the explicit subject, this ruling effectively caused virtual digital assets to possess legal and economic recognition.
Legislative Tax Recognition
Following this judicial development, the Indian government further strengthened NFTs’ status by including them within the definition of “virtual digital assets” through the Finance Act, 2022[2]. NFTs can attract income tax at a flat rate of 30% on gains from their sale, with applicable tax deduction at source (TDS) requirements for transactions exceeding specified thresholds, thus giving them a status as taxable property.[3]
However, the absence of a comprehensive legal framework beyond taxation and within the ambit of Indian inheritance laws like the Indian Succession Act 1925 creates a regulatory vacuum for the NFT holders as well as their heirs.[4]
ESTATE PLANNING: ESSENTIAL CONSIDERATIONS
Detailed and Accurate Documentation
To ensure NFTs can be inherited, owners should keep a clear record, almost like an inventory, that lists each NFT, the blockchain platform it belongs to, and the private keys or passwords needed to access it.[5] Without this information, heirs would be unable to access or transfer these assets, no matter the value of the same.
Clear Testamentary Directions
It’s also important that NFTs are specifically mentioned in a will or trust, consisting of clear instructions on who should receive them. Since these are highly technical assets, many experts suggest appointing a digital executor or trustee, someone who has knowledge of how to handle cryptocurrency wallets and blockchain platforms, to assess the transfer process, ensuring it can be carried out smoothly.[6]
Secure Handling of Access Information
Since wills become public during the probate process, mentioning sensitive login information in them can be dangerous, as it would expose security details of the assets. Private keys and passcodes should never be written directly into a will; rather, safer methods such as encrypted storage services and digital vaults, or a confidential letter of instruction should be opted for.
These approaches help strike a balance by preserving security while also ensuring heirs can access the asset when needed.[7]
OWNERSHIP VS. RIGHTS
Owning an NFT is not equivalent to owning the copyright to the digital content it carries. Under Section 19 of the Copyright Act, 1957, copyright can only be transferred through a written and signed agreement.[8] This means that, when an individual buys or inherits an NFT, they get ownership of the token, but not the copyright in the artwork or content. The copyright stays solely with the original creator unless it is formally transferred.
For heirs, this causes a limitation as they can only sell or pass on the NFT, but they don’t gain the right to reproduce, adapt, or commercially use the digital work. Without an explicit copyright transfer, heirs’ control over the content remains restricted. For instance, if a person buys an NFT of a famous digital painting, they only own a token that proves their purchase, but they cannot print posters of the painting and sell them unless the copyright has also been formally transferred. Similarly, if their heir inherits the NFT, they can resell the token, but they still won’t have the legal right to commercially exploit the artwork.
JUDICIAL AND SCHOLARLY VIEWS
The Indian judiciary has not yet dealt with cases involving NFTs directly; however, the existing decision on cryptocurrencies provides a useful insight concerning their nature as property.[9] The Supreme Court’s recognition of virtual assets as property indicates that NFTs also fall within the ambit of transferable assets; however, there still remains ambiguity with respect to succession and inheritance of the same.
Legal scholars such as Pavan Duggal, V.K. Ahuja, and Sanjana Kumari have persistently called for revisions to succession laws to accommodate digital assets and their inheritance more explicitly, highlighting the importance of proper documentation and agreements for copyright transfer.[10]
This work also focuses on the need to align copyright laws with blockchain technology to minimise ambiguity and prevent disputes over digital estate rights.
PRACTICAL RECOMMENDATIONS
For the effective management and succession of non-fungible tokens (NFTs), the following measures are recommended for NFT holders and estate planners:
- Maintain and Update Records- NFT holders must keep compiling and regularly revise an inventory of NFTs, associated wallets, and login credentials to help ensure clarity of ownership, reduce the risk of disputes, and aligning estate planning with evolving regulations.
- Include NFTs in estate Documents- Mentioning the NFTs in the will or other estate planning documents, making sure to specify the intended beneficiaries.
- Protect Private Keys – Store private keys related to NFTs in a secure, encrypted vault, separate from the will. This enables the heirs to access them when necessary while preserving the privacy of the holders.
- Transfer Rights with Ownership- If an NFT carries copyright or related rights, provide a formal license or agreement of assignment so that the recipient inherits both the ownership as well as the copyright with other connected rights.
- Consult Professionals- NFT holders must work with estate lawyers and digital asset experts to ensure that the plans are both legally valid and technically secure.[11]
CONCLUSION
NFTs represent a transformative development in asset ownership and inheritance. Indian laws have made notable strides in recognising NFT ownership; unresolved legal questions remain, particularly concerning copyright transfer and access rights. For NFTs to move away from being just temporary digital collectibles and instead become meaningful family heirlooms, estate planning must be proactive and progressive. This requires careful documentation, strong security practices, and clear copyright arrangements, enabling NFT owners to preserve the integrity of their digital assets for future generations.
As law and technology continue to evolve together, prioritising digital estate planning will be crucial. With timely and thoughtful measures, NFTs can fulfil their potential as enduring and valuable legacies, rather than fading as short-lived digital trends.
Author(s) Name: Anayza Faiyaz (Barkatullah University, Bhopal)
References:
[1] Internet and Mobile Association of India v Reserve Bank of India (2021) AIR SC 2720.
[2] Income tax Act 1961, s 2(47A).
[3] Poornima Gupta, ‘Scheme of taxation of Virtual Digital Assets’ (TaxTMI, 21 Jan 2025) <https://www.taxtmi.com/article/detailed?id=13367> accessed 17 August 2025.
[4] Samriddhi Tripathi and Dr Reshma Umair, ‘Digital Inheritance: Bridging India’s Legal Gap’ (2025) International Journal of Research Publication and Reviews<https://ijrpr.com/uploads/V6ISSUE8/IJRPR51760.pdf > accessed 17 August 2025.
[5] Arka Prasad Roy, ‘Navigating The Legal Void: Digital Estate Planning In India’s Developing Legal
System (2020) International Journal of Advanced Legal Studies <https://www.journalijar.com/article/44077/navigating-the-legal-void:-digital-estate-planning-in-indias-developing-legal-system/> accessed 17 August 2025.
[6] Prashant Mali and Aswathy Prakash, ‘Death in the Era of Perpetual Digital Afterlife: Digital
Assets, Posthumous Legacy, Ownership and its Legal Implications’ (2019), National Law School Journal Vol. 15 (Issue 1), Article 8 <https://repository.nls.ac.in/cgi/viewcontent.cgi?article=1365&context=nlsj> accessed 17 August 2025.
[7] Tata Consultancy Services, ‘Asset Management: Digital Estate Planning’ (TCS Whitepaper, 2024) <https://www.tcs.com/content/dam/global-tcs/en/pdfs/insights/whitepapers/asset-management-digital-estate-planning.pdf> accessed 17 August 2025.
[8] Copyright Act 1957, s 19(1).
[9] Internet and Mobile Association of India v Reserve Bank of India [2021] AIR SC 2720.
[10] Gaurav Gupta and Ayushi Singh, ‘NFTS, Copyright And The Indian Art Community: Is The Buzz Still Legally Backed?’ (2025) Bridge Counsels Legal Analysis < https://bridgecounsels.com/nfts-copyright-and-the-indian-art-community-is-the-buzz-still-legally-backed/ > accessed 18 August 2025.
[11] Tripathi and Umair (n 4).
