The Central Board of Direct Taxes (CBDT) vide Notification No. 75/2022 dated 30.06.2022 in S.O. 2959(E) has notified non-fungible token (NFT) for the purpose of the definition of Virtual Digital Assets (VDAs) as per the provisions of section 2(47A) of the Income-tax Act, 1961 (‘Act’).
Finance Act, 2022 has provided to levy income tax on virtual digital asset transactions. For this purpose, a new clause (47A) is inserted to section 2 of the Act to define the expression “virtual digital asset” to mean,–
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(a) any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme and can be transferred, stored or traded electronically;
(b) a non-fungible token or any other token of similar nature by whatever name called;
(c) any other digital asset as may be notified by the Central Government in the Official Gazette in this behalf,
Clause (a) of the Explanation to section 2(47A) defines “non-fungible token” to mean such digital asset as the Central Government may notify in this regard.
By exercising these powers so conferred by Explanation (a) to section 2(47A), CBDT has specified that a token which qualifies to be a virtual digital asset as a non-fungible token within the meaning of sub-clause (a) of clause (47A) of section 2 of the Act but shall not include a non-fungible token whose transfer results in the transfer of ownership of an underlying tangible asset and the transfer of ownership of such underlying tangible asset is legally enforceable.
As a result, these transactions on these tokens will be charged to tax as per the provisions of section 115BBH of the Act. Further, TDS under section 194S of the Act shall attract in case of transactions on these tokens.
Section 115BBH provides for income-tax on cryptocurrency @ 30% from April 1, 2022. Further, 1% TDS is also prescribed on the transactions of VDAs from July 1, 2022.
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CBDT notifies non-fungible token (NFT) as Virtual Digital Assets
Read the full text of CBDT Notification No. 75/2022 dated 30.06.2022 on non-fungible token (NFT) Virtual Digital Assets
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 30th June, 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.
Download CBDT Notification No. 75/2022 dated 30.06.2022 on non-fungible token (NFT) Virtual Digital Assets in PDF format
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