Guidelines on the virtual digital assets are expected to be announced on June 15, for advance tax payment. The central Board of Direct Taxes (CBDT), according to government sources familiar with the situation, is now developing rules to remove any doubt from the newly constituted tax framework of NFT for asset holders.
Non-fungible tokens (NFTs) will be defined by the apex direct tax authority, and whether or not they are subject to VDA. In light of the market’s volatility, NFT values may also be clarified.
The provenance and ownership details of an NFT can be seen by anybody because it is stored on a blockchain. Regardless of their names, tokens like NFT are included in the VDA’s definition. Due to recent global uncertainties, the value of NFTs has plummeted.
It will also explain whether the value of a digitally awarded/redeemed credit card/loyalty point should be regarded as virtual assets or not. Even if it doesn’t achieve the stated goals of a VDA rule, the current definition of digital assets is too broad and might include such transactions.
These publication guidelines may further clarify how bitcoin exchange calculates and deducts taxes. The government has yet to establish the standards for calculating a 1% tax on bitcoin transactions as of July 1. A clarification of the GST treatment for cryptocurrency transactions could be beneficial. The Indian government now charges an 18% VAT on cryptocurrency exchange transactions.
Under the Union Budget 2022-23, all proceeds from the sale of VDAs are subject to a flat 30% tax, and all cryptocurrency transactions are subject to a 1% TDS. Cryptocurrency owners are required to pay these taxes under the new tax framework.
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Indian government aims to impose 28% GST on crypto to expand indirect taxes
