NFT = VDA. Section 115BBH 30% flat tax + Section 194S 1% TDS. No loss offset. OpenSea, Rarible, Magic Eden Indian users. Schedule VDA mandatory in ITR.
NFT = VDA (Virtual Digital Asset) under Section 2(47A) of Income Tax Act. SAME tax as crypto: (1) 30% flat tax under Section 115BBH on gains. (2) 1% TDS under Section 194S on transfers. (3) No loss offset. (4) Schedule VDA in ITR. (5) NFT creators + buyers + traders all covered. (6) Foreign NFT platforms (OpenSea, Rarible) — Indian users still tax-liable.
(1) NFT CREATOR: First sale of own NFT — treated as VDA transfer. 30% on profit. Cost basis: creation expenses + minting fees. (2) NFT TRADER: Buy-sell speculation. 30% on net trading gains. Schedule VDA. (3) NFT INVESTOR: Long-term hold + occasional sale. Same 30% applies (no LTCG benefit for VDA). DIFFERENCE FROM CRYPTO: same tax treatment, no special NFT rate.
Foreign NFT platforms (OpenSea, Rarible, Magic Eden, etc.) Indian users: (1) STILL TAX-LIABLE in India on gains. (2) Foreign platforms typically don't deduct 194S TDS. (3) Indian residents MUST self-disclose + pay tax. (4) Schedule FA disclosure if foreign holdings > limits. (5) ED + IT Department investigating non-disclosure. RECOMMENDATION: maintain transaction records + voluntary disclosure for compliance.
NFT royalty income (when NFT resells, original creator gets %): (1) Generally treated as VDA business/professional income. (2) 30% under 115BBH if directly tied to NFT transactions. (3) Could be different if creator running NFT royalty business — consult CA. (4) Foreign platform royalties — Indian taxation applies + disclosure obligations.
NFT minting (creating + uploading): (1) Gas fees on Ethereum blockchain = cost of NFT creation. (2) Deductible as acquisition cost in 115BBH calculation. (3) Indian platforms (e.g., WazirX NFT) lower fees vs Ethereum. (4) Polygon, Solana — different fee structures. (5) DOCUMENTATION: Save all transaction confirmations + gas receipts.