13:21 08th Jun, 2022
Taxing NFTs Is The Wrong Move | TechTree.com
Taxing NFTs Is The Wrong Move
Analysts say taxing the NFT industry would kill it. Taxing NFTs at the same 30% rate as crypto would kill the nascent industry before it has the chance to blossom.
The Finance Ministry in India is all set to define VDAs (Virtual Digital Assets), which include NFTs (Non-Fungible Tokens). But analyst have stressed the need to differentiate between NFTs that represent real (or virtual) assets from cryptocurrencies that lack an underlying asset, since cryptos are essentially assets themselves.
Analysts state that VDAs need to be better defined by the CBDT (Central Board of Direct Taxes) before taxpayers pay first advance tax by June 15. The last time it was defined was in 1961 in the Income Tax Act, which states that a VDA includes any information, code or number generated through cryptographic means. This definition is far too broad and quite unhelpful when it comes to NFTs.
“I don’t understand why gains from NFTs to be taxed at 30% on gross basis with disallowance of any other expenditure. Cryptos may lack transparency, but NFTs are not cryptos as one can pay for these through credit cards or other usual payment methods,” said EY India tax leader Sudhir Kapadia. Kapadia also said that even though Singapore taxes cryptos, NFTs are excluded from the definition of cryptos.
Analysts say that India has the third most NFT company headquarters in the world. “One has to encourage these technology start-ups instead of killing them right away. If it is a purely NFT start-up, nothing to do with cryptos, why discourage it. Businesses will shift to Singapore and other places.” said Kapadia.
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