CBDT Notifies Non-Fungible Token as VDA

Last updated: 02 July 2022

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The Central Board of Direct Taxes (CBDT) has officially notified that Non-Fungible Tokens (NFTs) are to be classified as Virtual Digital Assets (VDAs) under India's Income-tax Act, 1961. This clarification means that NFTs will be subject to the tax regulations applicable to VDAs. However, this classification excludes NFTs where the transfer of the token also results in the legally enforceable transfer of ownership of an underlying tangible asset.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 30th June, 2022
Notification No. 75/2022 - Income-tax

S.O. 2959(E). - In exercise of the powers conferred by clause (a) of Explanation to clause (47A) of
section 2 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred as ‘the Act’), the Central
Government hereby specifies a token which qualifies to be a virtual digital asset as non-fungible token within the meaning of sub-clause (a) of clause (47A) of section 2 of the Act but shall not include a nonfungible token whose transfer results in transfer of ownership of underlying tangible asset and the transfer of ownership of such underlying tangible asset is legally enforceable.

2. This notification shall come into force from the date of publication in the Official Gazette.

[Notification No. 75/2022/F. No. 370142/29/2022-TPL (Part-I)]
ANKIT JAIN, Under Secy.

FAQ :

The CBDT has notified that Non-Fungible Tokens (NFTs) qualify as Virtual Digital Assets (VDAs) under the Income-tax Act, 1961.

No, NFTs whose transfer results in the transfer of ownership of an underlying tangible asset, where this transfer is legally enforceable, are excluded from this classification.

This notification comes into effect from the date of its publication in the Official Gazette.

The relevant section is clause (a) of Explanation to clause (47A) of section 2 of the Income-tax Act, 1961.

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Notification No : 75/2022 - Income-tax
Published in Income Tax
Source : https://incometaxindia.gov.in/communications/notification/notification-no-75-2022.pdf

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