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Cryptocurrency News Articles

NFTs Are Legal in India. Here's a Guide to Understanding the Indian Legal Landscape of Non-Fungible Tokens

May 26, 2025 at 05:08 pm

Non-Fungible Tokens, or NFTs, have swept the world recently. From artwork to collectibles, even music, NFTs are the new means of owning and trading digital assets.

NFTs Are Legal in India. Here's a Guide to Understanding the Indian Legal Landscape of Non-Fungible Tokens

Non-Fungible Tokens, or NFTs, have swept the world recently. From artwork to collectibles, even music, NFTs are the new means of owning and trading digital assets. With that, although the idea is fascinating, most Indians are unsure whether NFTs are legal in India or not. This work aims at making it easy for one to understand the Indian legal landscape around NFTs in a way that creators, sellers, and buyers will know what to recall.

What are NFTs?

Let’s begin with what NFTs are. An NFT is a one-of-a-kind digital token that signifies ownership of something, usually digital. NFTs differ from cryptocurrencies such as Bitcoin or Ethereum in that they can’t be traded with each other because each is singular — thus the “non-fungible” term. They are typically made and kept on a blockchain, an un-hackable, open digital ledger.

Due to the nature of blockchain, it is difficult to forge an NFT or copy it. An NFT can be sold or exchanged with another on a secondary market.

NFTs have become widely used in recent years. For instance, a highlight of the metaverse is the sale of virtual plots of land in the metaverse as NFTs. Famous musicians like Snoop Dogg and performers like Linkin Park have also sold their music as NFTs.

Are NFTs Legal in India?

Yes, NFTs are legal in India. But that does not mean that they are well-regulated or unencumbered by legal complexities. India hasn’t passed specific legislation covering NFTs as such. Instead, NFTs fall under the purview of existing laws covering digital assets, intellectual property, taxation, and even sometimes securities legislations.

This absence of direct regulation is the type that permits NFT transactions to be facilitated but risk and uncertainty are implicated.

Now, let’s take a closer look at some of the key legal aspects:

Intellectual Property and NFTs

The single largest legal issue with NFTs is intellectual property (IP). When you purchase an NFT, you gain possession of the digital token, but it doesn’t automatically imply that you own the artwork it’s based on (e.g., paintings or music). The complete ownership rights depend on the terms set by the platform or artist whose work the NFT is being sold.

In India, intellectual property law like copyright and trademark law comes into play. If a seller of an NFT uses another person’s material on it without permission, there could be legal problems with violating copyrights. Buyers need to be fully aware of what they are buying with an NFT so nothing goes wrong.

Taxation of NFTs in India

Taxation is another area to consider. The Indian government classifies revenue generated from selling NFTs as digital asset income. Sellers should report and pay tax on such income under the Income Tax Act. Tax can be applied based on the nature of the income, i.e., business income, capital gains, or another category.

Additionally, goods and services tax (GST) might be applied to selling NFTs, especially if NFTs are deemed digital goods or services. The precise taxation can be complicated and depends on the latest guidelines, so it’s best to consult a tax advisor.

Regulatory Uncertainty and Future Legislation

Up to now, there has not been any regulation by the Reserve Bank of India (RBI) or the authorities regarding NFTs. They have been cautious regarding digital currency and money, such as NFTs, for the fear of money laundering, forgery, and safeguarding the investors’ interest.

However, the government in India has been working on creating a broader context of digital assets and cryptocurrencies. More specific regulations relating to NFTs are likely to be enforced in the near future to fill legal loopholes and protect market players.

Risks to Consider

As the legal landscape is still developing, there are several risks to keep in mind when trading in NFTs in India:

• Fraud and Scams: Without close regulation, there could be scam or fraudulent NFT projects or sellers. It’s crucial to do thorough research before investing.

• Intellectual Property Disputes: As discussed earlier, purchasing an NFT doesn’t always grant you complete ownership of the creative work.

• Tax Compliance: Failure to report income generated through NFTs can lead to penalties.

• Volatility: NFTs are inherently highly speculative, and their prices can fluctuate drastically.

Five Tips for Navigating NFTs Legally in India

1. Understand the Ownership Rights: Read the terms and conditions very carefully before purchasing an NFT so that you understand what rights you are purchasing. You might own the token of an NFT, but that does not mean you possess the digital content.

2. Be Up to Date with Legal Developments: The law surrounding digital assets is continuously changing in India. Keep an eye out for government and regulatory agency releases to remain informed about new rules and regulations.

3. Keep Tax Records: Keep neat records of all NFT sales, including the buying cost and sale proceeds. It will assist with accurate tax reporting and prevent future hurdles.

4. Use Genuine Platforms:

Disclaimer:info@kdj.com

The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!

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