The Central Board of Direct Taxes recently came up with two notifications that further clarified the definition of Virtual Digital Assets (“VDA”) as given in Section 2(47A) of the Income Tax Act, 1961 (the “Act”). Notification 1 notified that gift cards, vouchers, mileage points, reward points, loyalty cards, subscriptions to websites or platforms or applications are excluded from the definition of VDA. Notification 2, on the other hand, has specified that a Non-Fungible Token (“NFT”) whose transfer results in the transfer of ownership of an underlying tangible asset which is legally enforceable, will not be covered under VDA.

Power to Alter Definitions
Both these notifications have been issued pursuant to powers given to the Government under Section 2(47A) of the Act to exclude any digital asset from the definition of a VDA and power to specify digital assets that would get covered under NFT. With an evolving nature of VDAs, it perhaps appealed to the legislators to give powers to the Government to alter the definition as and when required through notifications. However, such powers that allow the Government to alter the definition by issuing a mere notification may result in lack of stability in taxing VDAs leading to unnecessary litigation. In fact, this begs the question of should delegated legislation be allowed to alter the definition of an asset which carries a high rate of tax?

The Central Board of Direct Taxes recently came up with two notifications that further clarified the definition of Virtual Digital Assets (“VDA”) as given in Section 2(47A) of the Income Tax Act, 1961 (the “Act”). Notification 1 notified that gift cards, vouchers, mileage points, reward points, loyalty cards, subscriptions to websites or platforms or applications are excluded from the definition of VDA. Notification 2, on the other hand, has specified that a Non-Fungible Token (“NFT”) whose transfer results in the transfer of ownership of an underlying tangible asset which is legally enforceable, will not be covered under VDA.

Non-fungible tokens (NFTs) are digital assets that have, more or less, changed/expanded the definition of the term ‘art’. Art is no more limited to paintings, sculptures, photography or performances, instead it is beyond that. NFTs are an example of evolution of the art in the digital world and a modern approach to invest in art.

From the very beginning, the Government of India has been sceptical about crypto assets. Time and again, the Reserve Bank of India ("RBI") has come up with press releases about the security concerns and cautioned investors against trading in crypto assets. The RBI issued a circular in April 2018 ("RBI Circular") prohibiting banks from providing services to the crypto asset sector. The RBI circular was, however, stuck down by the Supreme Court on the grounds of proportionality of such measure which lacked aspects of damage to the banking entities regulated by the RBI.

Non-fungible tokens (NFTs) have become widely popular in the digital world. Exclusive and premier NFTs such as Bored Ape Yacht Collection or CryptoPunk have been sold for millions of dollars and promise huge returns for the creators as well as the sellers/resellers of such NFTs. However, a counter view, proposed by a lot of people suggest that......

Non-fungible tokens (NFTs) have undoubtedly taken the digital world by storm, involving transactions worth of millions of dollars and giving an outlet for the artists to generate revenue for their artwork in the form of a ‘digital asset’.

The Indian gaming industry has been seen to be one of the most lucrative marketplaces for developers and has surpassed all other nations in terms of growth and industry capacity. According to several data and reports, The Indian gaming industry base has boomed from around 250 million in 2018-20 to 400 million in 2021-22. The general demography is people under the age of 25 (more than 60%) and it has been observed that the Covid-19 pandemic has encouraged a huge population to join the gaming industry to cope with boredom.

The current raging trend in the tech world and blockchain technology is undoubtedly, the Non-Fungible Tokens (NFTs). They bring great opportunities for investors and tons of new possibilities for artists/ creators around the world. The digital world is growing at a pace where, finally, art is being recognized like never before, where a taco art is being sold for hundreds of dollars and a bored ape for millions!

While, most of the countries like the United States, Canada, Australia, Japan, South Korea, etc. have regularised cryptocurrencies in their jurisdictions, cryptocurrencies or digital currencies remain unregulated and still, a grey area in India. The topic has been in debate for quite long now, but the Indian Government is yet to come out clearheaded on the same.