May 2, 2022
By Sharan Kaur Philllora
The recent sharp drop in the prices of highly valued NFTs (Non-Fungible Tokens) and the unclear tax framework established in the 2022-23 Budget is expected to lead to severe tax scrutiny for Indian investors.
Here’s what we know:
The Indian tax department is all set to question and verify the reasons for a drop in these digital assets under suspicion of acceptance in cash by investors and other parties to reduce fiscal spending.
Amit Maheshwari, a tax partner at a tax consulting firm said “Any seller will have a hard time convincing tax officials that the sale was fair due to the big drop in NFT prices”.
The union budget for 2022-23 has introduced a flat 30% tax on all profits from the sale of virtual digital assets and a 1% tax deducted at source on all crypto transactions.
Industry trackers say some of the NFTs have seen a drop in valuation due to a lack of utility from the underlying asset. Crypto assets including NFTs have seen a drop in the number of transactions in India since the beginning of April.
Many major exchanges have also noticed a drastic drop in their daily trading volumes due to the recently introduced tax framework.
With growing uncertainty surrounding the regulatory landscape of cryptocurrencies in India, it is important that investors make well-informed decisions when investing in these digital assets.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
