Double tax for NFTs: Deals may attract GST, equalisation levy

Non-fungible tokens (NFTs) have become a buzzword in India, even among those who may not necessarily be familiar with cryptocurrencies. But those looking to buy these digital collectibles in the country may have to end up paying more to the government.

Sources told the Economic Times that buying a NFT may not only attract the normal Goods and Services Tax (GST) but also a 2% equalisation levy, which is normally reserved for corporations based outside of India but operating within the country

The idea also made the rounds when it came to cryptocurrencies being taxed in India, but the speculation was shot down by India’s Finance Minister, Nirmala Sitharaman, last month. “Equalisation levy is imposed on e-commerce operators, not on the investors,” she explained during the Monsoon Session of Parliament on July 27.

The controversial levy, also called the ‘Google Tax’, has historically only been imposed on foreign companies — like Amazon, Facebook and others. The logic behind the tax was for these companies to compensate the Indian government for earnings revenue from Indians through online ads.

If double taxation does indeed come into effect, the adoption of NFTs in India could get slower than what has been seen over the span of this year. There is also ongoing debate over the value of these digital assets. Not only are they volatile, as with cryptocurrencies, but they’re also entirely speculative — as with works of art and qualitative assets in real life.

The blockchain-based digital collectibles have been making headlines not just for their high valuations, but also due to new use cases popping up as a result of the pandemic.

In a world where social distancing and traveling are restricted, being able to attain collectibles online has been a popular choice for both the sporting world and its fans.

An NFT, as its name implies, is non-fungible. In technical terms, each NFT is a unique code or blockchain-based digital file. This means that one NFT cannot be exchanged for another like with cryptocurrencies, where one Bitcoin is identical to the next, aside from ownership.   ReadMore

Source : businessinsider

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