India’s Requirement for Proper Regulation of NFT’s & Crypto Market
- The world is moving away from traditional currencies and toward electronic versions, particularly virtual currency.
- Non-fungible tokens, often known as NFTs, are a modern technology-based token that are prominent in today’s markets.
- NFTs are digital assets with a distinct identity that are interchangeable with other digital assets but cannot be replaced.
- Non-fungibility prohibits copying and manipulation of non-fungible tokens. Crypto and non-fungible tokens are regulated by the same regulations as they both use blockchain technology.
- Cryptocurrencies can be traded for one another, while non-fungible tokens cannot. The development of cryptocurrencies on a global scale has certainly attracted Indian traders’ and investors’ attention.
Important of cryptocurrencies in Indian Situation
- The first transaction in the United States of America took place 9 years ago whenever anyone spent 10,000 Bitcoin on two pizzas. According to a survey by Broker Chooser, India now has the highest percentage of cryptocurrency owners in the world, despite uncertainty regarding the existence of cryptocurrency legislation.
- According to another source, there are currently about 2 crores of investors using Indian cryptocurrency exchanges.
- India was rated second globally in terms of total cryptocurrency searches, which shows the new interest.
Future of Crypto in India
- The Reserve Bank of India issued a circular in 2018 directing all enterprises under its regulation to refrain from dealing with or offering services related to virtual currencies. However, the Supreme Court reversed the Reserve Bank of India’s ban in March 2020, ruling that it was “disproportionate.”
- But, it implies the need for regulation to cope with such virtual currencies, not that the Supreme Court has legalised cryptocurrencies.
Regulation of NFT’s & Cryptocurrencies in India
- As far as we know, there’s really currently no regulation or legislation governing or regulating cryptocurrencies in India. Making laws and rules for cryptocurrency is currently being worked on in India.
- In the past, the government had intended to explicitly prohibit private cryptocurrency while facilitating the development of an official digital currency. Given how important it is to Indian investors,
- The government is taking its proper time so that the legislation it will impose would be in accordance with the international regulatory regime.
Indian Regulation of Crypto & NFT’s Challenges in India
- The structure of the proposed bill and the basis of the definitions will decide the future of non-fungible tokens and cryptocurrency.
- Due to the fact that non-fungible tokens and cryptocurrencies both use the same technology, namely blockchain, the future bill may have an influence on both. The classification of non-fungible tokens will determine how they are treated under Indian law.
- NFTs are traded on the Distributor Ledger Technology (DLT) network on a worldwide scale, although trading non-fungible tokens in India will need to be legalised.
- The FEMA law, the Information Technology Act, the Intellectual Property Act the treatment under the Income Tax Act, and the SEBI laws for trading of these Tokens or digital currencies would all be impacted by non-fungible tokens and cryptocurrency.
Taxation on income arising on transfer of virtual digital assets
Tax dept is issuing an alert on crypto transactions which are high value.
- Tax dept is issuing an alerts on crypto transactions which are high value. The said crypto transactions matter came to light earlier this week when There has been a rise in tax dept related queries which tied to high value crypto transactions.
- Basically Indian Govt is maintaining a strict oversight on all income tax work related to high value crypto transactions in India.
- Given the confusion around income tax filing cryptocurrency taxes, only about 7% crypto holders in India paid their taxes earlier year.
- 30 percentage income tax is levied on cryptocurrency earning & 1 percentage Tax deducted at sources is deducted on cryptocurrency transaction – basic objective to track defaulters & identify the suspicious cryptocurrency holders. And take the appropriate action on them.
GST on Crypto in India – July 2025 Update
1. GST Now Applies to Crypto Platform Fees
Effective 7 July 2025, 18% GST will be levied on trading fees, withdrawal and deposit fees, staking and wallet services, and custody and transfer services. These services are considered a supply of services under GST, and exchanges must register and charge GST.
2. Crypto Gains Still Taxed at 30%
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Flat 30% tax on all crypto gains (transfer/sale)
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+4% health and education cess
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No deductions allowed (except cost of acquisition)
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Losses cannot be set off or carried forward
Changes to Tax Structure – GST (Effective December 1, 2023) – What’s Changing?
Impact on Users
3. TDS on Crypto Sales (Section 194S)
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1% TDS on total sale value
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Thresholds:
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TDS applies even on losses
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Deducted by the buyer/exchange
4. Example
| Transaction | Value |
| Sale value | ₹3,00,000 |
| Profit | ₹31,200 |
| TDS (1%) | ₹3,000 |
| Exchange fee | ₹3,000 |
| GST on fee (18%) | ₹540 |
So the effective taxes include:
5. Why GST Now?
- Exchanges are now classified as service providers & Must register under GST laws, All service-based charges (like brokerage) are taxable . following are Key Takeaways on GST on crpto.
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18% GST on exchange/platform services
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30% tax + cess on crypto gains
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1% TDS on gross sale value
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Track every transaction (cost, date, counterparty)
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Crypto in India is no longer tax-free or unregulated. You’re now subject to
→ GST on services
→ Income Tax on profits
→ TDS on sales
7. Compliance Tips
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Report crypto income in ITR Schedule VDA
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Claim TDS credit under Form 26AS
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Maintain detailed records (purchase date, cost, sale proceeds)
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Ensure platform invoices reflect GST charged
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Invoices & Transparency – Monthly tax invoices with GST details will be emailed.
FAQs on GST on Crypto Sales
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What is GST? A unified indirect tax on the supply of goods/services, levied to streamline taxation.
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How much is GST? Varies by jurisdiction. Indian users: 18%.
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Invoices? Yes, sent monthly.
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Order Status? All open orders during downtime will be cancelled.
TDS on Virtual Digital Assets (Crypto/NFTs) in India – Effective July 1, 2022
Legal Basis—Introduced via Section 194S of the Income Tax Act, Circular issued by CBDT on June 22, 2022 & TDS Applicable from July 1, 2022, Key Provisions related to TDS is
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TDS Rate is 1% on sale/transfer of VDAs & 5% for non-filers under Section 206AB
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The TDS Thresholds: INR 50,000/year for specified persons (e.g., individuals not liable to audit) & INR 10,000/year for others
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Income tax TDS Deduction Timing At the time of credit or payment, whichever is earlier
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TDS deduction Responsibility is on the buyer, who must deduct and deposit TDS & Platforms like ZebPay automate this process
- The taxpayer must keep transaction records & also File tax return and claim TDS credit, You needed to Check your Form 26AS for TDS entries and TDS ≠ Capital Gains Tax (30%). TDS is advance tax, and 30% tax + cess/surcharge is payable on profits at year-end
- Example Calculation
Sell Order: 1 BTC @ INR 20,00,000
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Transaction Fee @ 0.5% = INR 10,000
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TDS @ 1% on INR 19,90,000 = INR 19,000
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Net Proceeds: INR 20,00,000 – INR 10,000 – INR 19,000 = INR 19,71,000
TDS Applicable on Crypto Transactions- TDS Applicable on:
TDS is Not Applicable on:
FAQs Summary – TDS Applicable on Crypto Transactions
Q.1: Why 5% instead of 1%?
If ITRs not filed for previous 2 years, per Section 206AB
Q.2: Where can I view TDS?
App/Web: Order History → TDS Breakdown
Monthly TDS statements downloadable
Q.3: Can I claim TDS refund?
Yes, adjustable in ITR under Form 26AS
Q.4: Is exemption possible?
Only if total annual trades < threshold. No certificate-based exemptions allowed under 194S.
Q.5: Why TDS on Crypto-Crypto trades?
Because it involves selling one asset to buy another (ownership changes).
Q.6: TDS on transfers to wallets?
Yes, if there’s a change in ownership, TDS applies.
Summary
- As the non-fungible token and cryptocurrency markets expand globally, Indians are becoming involved and showing interest in making investments or developing their own non-fungible tokens.
- It shows the need for rules. Non-fungible token regulations and legalisation of cryptocurrencies would assist India in creating an open system while also considering national interests.
- Positively, it appears that the coexistence of conventional and new digital currencies will be preferred in the near future rather than the choice of a single currency, making the legislative framework supporting such a parallel approach more practical and advantageous.
- This could aid India in addressing these issues as well as seizing the chance they present.
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