NFT as a Virtual Digital Asset

A non-fungible token falls inside the Section 2(47A) definition, so it behaves like any other VDA. What surprises people is that an NFT trade usually contains two taxable transfers rather than one.

Key highlights

Two legs, both inside Section 115BBH.

30%

On the gain at each leg, with 4% cess

Section 115BBH

Deducted from the sale value

Section 194S

Two

Transfers in a coin-for-NFT purchase

The coin, then the NFT

Buying With a Coin Is a Transfer

Paying rupees for an NFT is not taxed; it sets a cost and a date. Paying with a coin is different, because handing over the coin is a transfer of that coin, and the gain on it crystallises even though the NFT is what you wanted.

The NFT then starts its own basis at the rupee value you paid. Buy with ETH that cost ₹80,000 and was worth ₹1,00,000 that day, and the ₹20,000 gain on the ETH is taxed now while the NFT carries ₹1,00,000 forward.

Selling It Is a Second Transfer

Sell that NFT for ₹1,50,000 and the ₹50,000 gain is charged at 30% with 4% cess, giving ₹15,600. The 1% under Section 194S comes off the sale value, so ₹1,500 is withheld and claimed back as credit in the return.

Royalties and platform fees do not change the computation, because Section 115BBH(2)(a) allows the cost of acquisition and nothing else. Both legs are reported in Schedule VDA, one row each.

Frequently Asked Questions

The questions this term raises most often.

Yes. Section 2(47A) covers non-fungible tokens, so the flat 30% under Section 115BBH and the 1% deduction under Section 194S both apply to a transfer.

On the coin you paid with, yes. Handing it over is a transfer, so the gain on that coin is taxed at that moment, and the NFT takes a fresh cost basis equal to the value you paid.

No. Cost of acquisition is the only deduction Section 115BBH allows, so marketplace and gas fees give no relief against the gain.

This page states the law and what CryptoKar computes from your trade history. It is not tax advice. Judgment calls belong with a chartered accountant. Sections and dates here were read against the source on 21 August 2026.

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