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Understanding NFTs and Taxation in India
Non-Fungible Tokens (NFTs) have surged in popularity as digital assets representing ownership of art, music, and collectibles. In India, the Income Tax Department treats NFTs as “virtual digital assets” (VDAs) under Section 2(47A) of the Income Tax Act. As of 2025, profits from NFT sales or transfers are subject to taxation, similar to cryptocurrencies like Bitcoin.
How NFT Profits Are Taxed in India (2025)
NFT transactions may trigger two types of taxes:
- Capital Gains Tax: Applies if NFTs are held as investments.
- Short-Term Capital Gains (STCG): 30% tax if sold within 24 months.
- Long-Term Capital Gains (LTCG): 30% tax + 4% cess if held over 24 months.
- Income Tax: 30% flat rate + cess if NFTs are traded as business income.
Tax Scenarios for NFT Transactions
- Casual Selling: A 30% tax applies to profits from occasional NFT sales.
- Frequent Trading: Treated as business income, taxed at slab rates + 30% if classified as speculative.
- NFT Creation: Royalties taxed as “income from other sources” at slab rates.
- NFT Losses: Losses cannot offset other income (Section 115BBH).
Steps to Report NFT Income in 2025
- Track acquisition cost, sale price, and dates for all transactions.
- Classify gains as capital or business income.
- File using ITR-2 or ITR-3 with Schedule VDA.
- Pay 1% TDS on transactions over ₹50,000 (Section 194S).
Recent Updates for 2025
- CBDT clarified NFT minting costs as deductible expenses.
- GST may apply to NFT platform fees (18% rate).
- Mandatory disclosure of foreign NFT holdings under Schedule AL.
FAQ: NFT Taxation in India 2025
1. What tax rate applies to NFT profits?
All NFT gains face a 30% tax + cess, regardless of holding period.
2. Can I deduct NFT losses?
No. Losses cannot reduce other income but may carry forward for 8 years.
3. Is GST applicable to NFTs?
Only on service fees, not NFT asset transfers (as per 2024 amendment).
4. Penalty for not reporting NFT income?
50-200% of tax owed under Section 270A.
5. Are NFT gifts taxable?
Recipient pays tax if sold later; gifts over ₹50,000 may attract clubbing provisions.
💼 Secure Your Free $RESOLV Tokens
🚀 The Resolv airdrop is now available!
🔐 No risk, no fees — just a simple registration and claim.
⏳ You have 1 month after signing up to receive your tokens.
🌍 Be an early participant in an emerging project.
💸 Why wait? The next opportunity to grow your assets starts here.
