Non-Fungible Tokens

Non-Fungible means?
Fungible – It’s not unique and can be replaced with something else.
Example: Currencies

Therefore, Non-Fungible means it’s unique and can’t be replaced.

Example: Painting ‘Monalisa’ by Leonardo da Vinci
 Non-Fungible Tokens
Non-Fungible tokens (NFTs) are cryptographic assets on a block chain with
unique identification codes and metadata that distinguish them from each other.

Ethereum was the first block chain to support NFTs.

 The NFT ‘The
Insurgent
blossom’ sold
for Rs.7.73
lakhs.

A group of NFTs by The CryptoPunks NFT was

digital artist Beeple Bored Ape NFT sells
sold for $3.08 million
sold for over $69 for $2.7 million,
million. making it the most
expensive in Yacht
Club collection.
 Pros of Non-Fungible Tokens:
• Help artists to sell their paintings, music etc. for a good amount of
money

• Can be used for variety of purposes.

• Foster Marketplace Efficiency

• Used to Fractionalize Ownership of Digital Assets

• Block chain Technology Behind NFTs Is Very Safe

• Provide Diversification Benefit to an Investment Portfolio

 Cons of Non-Fungible Tokens:
• Illogical to buy

• Huge energy consumption

• Spending money for buying overhyped digital arts

• Unregulated Sector

• Used To Perpetuate Fraud

• Do Not Generate Income

• Illiquid and Volatile

TAXABILITY OF NFTs – BUDGET 2022
• Gains from the sale of virtual digital assets will attract a
flat 30% tax

• Loss arising from the sale of any virtual assets cannot be

set off against any other income.

• TDS of 1% will be levied on payments made on transfer of

the digital assets – Section 194S

• Gifting crypto currencies or any other virtual digital

asset will be taxed at the same rate at the hands of the
recipient.

• No deduction in respect of any expenditure (other than

cost of acquisition) shall be allowed.

Applicable from Assessment Year 2023-24.

CONCLUSION – FUTURE OF NFTs
• Lot of scope to store and transfer digital assets.
• Technology is still in the initial stages.

The real value of NFTs lies in their potential to transform the way markets function and
enhance the way we manage and control sensitive information.
“I’m confident it’s not a hype thing, It’s the catalyst for a generation.”