Government’s Eyes on NFT Tax | Tax Provisions on Crypto and Tax liability on Bitcoin
After crypto, the government’s eyes on NFT too, you may have to pay this kind of tax
Tax on Crypto
If the investment in crypto is redeemed after three years, then its profit will be considered as long term capital gain. Then it will be taxed at the rate of 20 per cent with indexation. Trading of crypto currency or buying and selling of crypto is done repeatedly, then the profits from its sale will be taxed as business income.
Tax on NFT
After cryptocurrencies, now the government has decided to bring non-fungible tokens also under the tax net. If you also buy and sell any digital file on the blockchain, then you may have to pay the Goods and Services Tax (GST) along with the equalization levy on it.
This means that if you buy an NFT, then it is going to cost you one percent. The tax department is considering imposing a two percent equalization levy on such transactions.
With this, the indirect tax department can now ask the exchange to pay GST on the transaction value of NFTs. The trend of NFTs in India has started only a few months back.
The advantage of this is that people of India can now buy art, digital goods, YouTube videos and audio files in digital format. Girish Vanwari of tax advisory firm Transaction Square said that like crypto, now NFTs will also have to pay GST and equalization levy.
Tax on online transactions
The equalization levy is applicable on all online transactions if Indians conduct any digital transaction from an exchange located outside the country.
If this exchange is present in the country, then GST has to be paid on online transactions. Experts say that NFT will now have to pay tax like crypto. Experts say that no distinction has been made between buying crypto and NFT on the issue of tax.
Tax Provisions on Crypto
As per the general provision of income tax, tax on crypto will depend on whether it is held in the form of currency or asset. If crypto is traded repeatedly, then the profits from its sale will be taxed as business income. If the investor keeps it with him for investment purposes, then he will have to pay tax on capital gains.
Tax liability on Bitcoin
Tax experts say that any source of income in India comes under the tax net, even if it is cryptocurrency? Buying and selling of cryptocurrencies is also a type of investment, so tax liability will also be created on it.
Earnings from bitcoin or other cryptocurrencies can be considered speculative income or can be kept in the realm of ‘income from other source’. In this context, people investing in crypto want to keep themselves safe, then paying 30 percent tax can be the right option for them.