NFTs, or Non-Fungible Tokens, have taken the digital world by storm. These unique digital assets, built on blockchain technology, represent ownership of art, music, gaming items, and even virtual real estate. Unlike cryptocurrencies, NFTs are one-of-a-kind, making them highly valuable for collectors, investors, and creators alike.
As exciting as NFTs are, understanding their tax treatment in India is crucial. The Indian government classifies NFTs as Virtual Digital Assets (VDAs), making them subject to strict tax rules. Whether you are buying, selling, or holding NFTs, each transaction carries a tax obligation you must not ignore.
In this guide, we will explain how NFTs are taxed in India, including when taxes apply, how much you must pay, and the calculations involved. By knowing your responsibilities, you can enjoy the benefits of NFT investments while staying fully compliant with Indian tax laws.
Read More: Ultimate Crypto Tax Guide in India
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Taxation on NFTs in India
Understanding how NFTs are taxed in India depends largely on how you acquire and dispose of them. Let us look at each case separately:
Buying NFTs With Fiat Currency
If you purchase NFTs using fiat currency such as INR, USD, or EUR, there is no immediate tax liability. The purchase itself is not treated as a taxable event under Indian tax laws. You simply acquire the NFT at the price you paid, and there is no need to pay income tax or capital gains tax at this stage.
Read More: How To Buy NFT in 5 Easy Steps
Buying NFTs With Cryptocurrency
If you buy NFTs using cryptocurrency like Bitcoin, Ethereum, or any other virtual digital asset, the transaction is treated differently. Spending cryptocurrency to buy an NFT is considered a disposal of the crypto asset. If there is any profit between the acquisition price and the value of the crypto used for the NFT purchase, you must pay a flat 30% tax on the gain, along with a 4% health and education cess.
Selling NFTs
When you sell an NFT for a profit, the gain is taxed at a flat 30% rate, plus a 4% health and education cess. The length of time you held the NFT does not matter. Profits from selling NFTs are treated like profits from selling other virtual digital assets.
Additionally, a 1% Tax Deducted at Source (TDS) will be deducted by the buyer if the transaction value crosses the specified threshold.
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How To Calculate NFT Taxes in India?
Calculating NFT taxes in India is simple once you understand the right steps. Here is how you can determine your tax liability based on the type of transaction you undertake:
Tax on Buying NFTs with Cryptocurrency
When you buy an NFT using cryptocurrency, it is treated as a disposal of the crypto asset. You must calculate any capital gain earned on the cryptocurrency you spent at the time of purchase.
Capital Gains = Fair Market Value at Disposal – Cost of Acquisition |
The capital gain is taxed at a flat rate of 30%, along with a 4% health and education cess. If there is no gain, no capital gains tax applies.
Example
In March 2024, Rohan purchased an NFT artwork using 0.05 Ethereum. At the time of purchase, the value of 0.05 Ethereum was INR 7,500. He had initially bought the 0.05 Ethereum for INR 5,000 a few months earlier.
Buying the NFT with Cryptocurrency
Since Rohan used cryptocurrency to buy the NFT, it counts as a disposal of Ethereum. His capital gain from the disposal is:
Capital Gains = Fair Market Value at Disposal – Cost of Acquisition |
Capital Gain = INR 7,500 – INR 5,000 = INR 2,500
This INR 2,500 will be taxed at 30%, resulting in a capital gains tax of INR 750, plus a 4% cess of INR 30, making the total tax liability INR 780.
Read More: All About NFT Trading Cards
Tax on Selling NFTs
Selling an NFT at a profit triggers a capital gains tax event. You must calculate the difference between the selling price and the acquisition cost.
Capital Gains = Sale Price of NFT – Cost of Purchase |
The capital gain will be taxed at 30%, with an additional 4% health and education cess. The holding period does not impact the tax rate; it remains flat regardless of whether you held the NFT for a short or long term.
Example
In February 2025, Rohan sold the NFT for INR 15,000. His cost of acquisition was INR 7,500. The capital gain from selling the NFT is:
Capital Gains = INR 15,000 – INR 7,500 = INR 7,500 |
This INR 7,500 gain is taxed at 30%, resulting in a capital gains tax of INR 2,250, plus a 4% cess of INR 90, making the total tax liability INR 2,340.
Additionally, a 1% TDS of INR 150 (1% of INR 15,000) would be deducted by the buyer at the time of sale.
Read More: Most Expensive NFTs in The World
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How Can KoinX Help With NFT Taxes in India?
Managing NFT taxes manually can be stressful, but KoinX makes it effortless. Here’s how KoinX helps you handle NFT taxation easily:
Accurate Preview of Capital Gains
KoinX allows you to preview your capital gains from NFT sales even before you make a transaction. This helps you plan better and make smart selling decisions. By understanding your tax obligations early, you can avoid surprises and ensure your profits are optimised throughout the financial year.
Auto-Classification of Transactions
Whether you are buying NFTs with crypto or selling them for fiat, KoinX automatically categorises every transaction. This saves time, reduces the chances of errors, and ensures that your NFT trades are properly sorted under income or capital gains, just as required by Indian tax regulations.
Reliable Tax Reports
KoinX generates highly detailed tax reports that cover all your NFT transactions. These reports include information like acquisition cost, sale proceeds, capital gains, and tax liability. You can use these reports directly while filing your Income Tax Return or share them with your CA for easy filing.
Portfolio Insights
KoinX gives you a complete overview of your NFT portfolio. You can track the acquisition price, current market value, and potential gains or losses. With these real-time insights, you can make better investment decisions and manage your NFT collection with more confidence and clarity.
Simplify your NFT tax journey today — Join KoinX now and stay ahead with confidence!
Conclusion
NFTs have opened new doors for digital ownership and investment, but they also bring tax responsibilities. Whether you are buying NFTs with cryptocurrency or selling them for a profit, understanding the Indian tax rules is essential to stay compliant and avoid penalties.
Instead of struggling with complicated calculations, you can rely on KoinX to handle your NFT taxes smoothly. Sign up today and experience an effortless way to manage your crypto and NFT taxation.
Frequently Asked Questions
Are NFTs Considered Virtual Digital Assets In India?
Yes, NFTs are classified as Virtual Digital Assets (VDAs) under Indian tax laws. This classification was introduced in the 2022 budget, and it subjects NFTs to the same tax rules as cryptocurrencies. Selling, swapping, or even using NFTs for purchases triggers tax obligations at a flat rate of 30%, along with a 4% cess.
Do I Pay Tax When Minting My NFT?
No, you do not pay tax at the time of minting your own NFT. However, when you sell the minted NFT and earn income from the sale, that profit becomes taxable. You will be liable to pay a 30% tax on the net gains, plus a 4% health and education cess at the time of the sale.
Is Staking An NFT Taxable In India?
Yes, staking an NFT can trigger a tax event in India. Any rewards earned from staking NFTs are treated as income and taxed according to your tax slab under “Income from Other Sources.” If you later sell the staked NFTs, you must also pay a 30% capital gains tax on the sale profit.
Are NFT Losses Set Off Against Other Income In India?
No, under Section 115BBH of the Income Tax Act, losses from the sale of NFTs cannot be set off against any other income. Additionally, NFT losses cannot be carried forward to future years. Only the cost of acquiring the NFT is allowed to be deducted while calculating your taxable gains.
Do I Have To Report NFTs In My Income Tax Return?
Yes, if you buy, sell, or earn from NFTs during the financial year, you must report these transactions in your Income Tax Return (ITR). Even if there is no gain or loss, it is important to disclose NFT holdings and sales under the relevant sections to remain fully compliant with Indian tax rules.
