Saturday, October 1, 2022

Indian‌ ‌Government‌ ‌May‌ ‌Impose‌ ‌Over‌ ‌Double‌ ‌Tax‌ ‌On‌ ‌NFTs‌ ‌

After cryptocurrencies, non-fungible tokens (NFT) have become a hot topic of discussion among youngsters in India. These blockchain-based digital collectibles are in headlines not just for their high value, but also for their new use cases during this time of the pandemic. 

However, now it appears that soon, the people interested in buying NFTs might have to pay more to the government.

A report published by Economic Times stated that the individuals buying NFTs in India might have to pay Goods and Services Tax (GST) and a 2 percent equalization levy. 

Notably, the 2 percent equalization levy is reserved for those international organizations that are operating in India.

A month ago, the same idea made the rounds for taxing cryptocurrencies but the Finance Minister of the country Nirmala Sitharaman shot down that speculation. 

On July 27, while addressing the Monsoon Session of the Parliament, she said, “Equalisation levy is imposed on e-commerce operators, not on the investors.” 

There is another controversial levy in India, called Google Tax, which is imposed on foreign companies like Amazon, Facebook and others. The main idea behind this tax was that these companies should compensate the Indian Government for generating revenue from Indians through online ads.

If the government imposes double taxation on NFTs then it could affect the adoption of these digital collectibles. There is also an ongoing debate over its value because of its volatile nature and these digital collectibles are highly speculative. 

NFTs Becoming Highly Popular In India

In India, NFTs are often used by rich individuals to diversify their portfolios. At the global level, these digital collectibles are emerging as a new avenue for Indian artists to showcase their work and generate revenue. 

According to a report, the Indian pop artist Ritviz collaborated with visual artist Santanu Hazarika to prepare a digital art form of his work and sold it for $391.80 on WazirX’s NFT marketplace. 

It is to be noted that within just 10 seconds Ritviz’s NFT was sold in the market. 

A popular TV host and actor in India Vishal Malhotra also sold one of his NFT for $5500 on an NFT marketplace.

In June, soon after that WazirX’s NFT marketplace went live, the platform sold over 160 digital art pieces.  

In a very short span of time, the NFT marketplace got much love and appreciation from its audience. Later, it decided to introduce digital collectibles that are solely focused on the athletes participating in the Tokyo Olympics. Till date, the company developed GIFs, artwork and other digital mementos of historic win moments in Japan. 

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