Contrary to the popular opinion, we have made it easier to buy NFTs in India. Being one of the largest crypto markets has recently also become one of the toughest countries for NFT owners. Rising taxes, stringent laws and a lot more difficulties have been introduced by authorities.
However, we will help you navigate these legal and technical challenges with ease. Through this article, we will address the issues of buying NFTs, selling them, taxation related to NFTs and will also show how to audit your holdings as per the law.
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Guide to Buy NFTs in India
NFTs representing a digital artwork records its ownership and history. These are also sometimes referred to as digital assets because they are often bought and sold for a profit. In India, NFTs and cryptocurrencies are together termed as Virtual Digital Assets.
Now before being able to buy NFTs in India, you need to setup a wallet, register with an exchange, buy Ethereum (ETH), and then understand the taxation process.
Setting Up a Digital Wallet
Before diving into the NFT market, one must first set up a digital wallet, a tool that allows you to store and manage your digital assets securely. Digital wallets are not just for storage; they also act as your identity on the blockchain network.
Popular options in India include MetaMask, Trust Wallet, and Coinbase Wallet, each offering different features and levels of security. For example, MetaMask is widely used for its ease of integration with most NFT marketplaces.
To setup your MetaMask wallet:
- Download MetaMask’s Android App, Apple App or Browser Extension (Chrome or Brave).
- Agree to its Terms and Conditions.
- Select, create a new wallet.
- Agree to the instructions, dos and dont’s.
- Set a password.
- Remember the 12-word key phrases. Note it down somewhere safe.
As most NFT marketplaces like CYAN support MetaMask’s browser extension only, it is preferable to download it rather than its Android or iOS app.
Also, since MetaMask is widely used by a lot of blockchain developers in India, we are confident that it is unlikely to be banned or restricted in the future. This is because, being a software exporter, India would never harm the country’s software professionals.
Buy Some Ethereum (ETH)
To freely buy NFTs from any exchange all over the world, getting some ETH is very essential as most NFTs exist on the Ethereum blockchain. Also most NFTs are listed with their prices in ETH.
Also, the reason why you should buy NFTs with ETH is that it simplifies your taxation process. You do not have sieve through all the transactions in your bank account.
Further, when buying with ETH, you also get the benefit of paying in instalments for your NFTs.
In India, you can easily buy ETH from local exchanges such as Zebpay or WazirX. You just need to go through a quick KYC. For me, it hardly took half an hour.
Navigating NFT Marketplaces
The next step to buy NFTs in India is to explore marketplaces, online platforms where creators and collectors buy, sell, or trade NFTs.
Indian buyers have access to both international platforms like Cyan, OpenSea, Rarible, and Foundation, and local marketplaces such as WazirX NFT.
Understanding the NFT Buying Process with CYAN
Buying NFTs on CYAN is a simple 2 step process. We have made it super simple to buy NFTs on our website. You just need to connect wallet and approve the transaction.
- Connecting Wallet: No account creation needed; users can connect their wallets directly via the “Connect Wallet” option, supporting MetaMask, Wallet Connect, Unstoppable Domains, Rainbow, and Rabbit.
- Buying Process:
- Wallet connection not required for browsing the Shop page.
- Over 107 Ethereum and 10 Polygon collections available for browsing in grid or list view.
- Filters help select desired traits and pricing. Selecting an NFT opens financing terms for down payment and loan duration, with an option for automatic repayments.
- Automatic Repayments deduct funds from either the user’s wallet or a Cyan Wallet, where NFTs on loan are held.
- A Cyan Wallet is created upon the first purchase or loan, where purchased NFTs are stored until the loan is repaid.
CYAN also features easy NFT Loans (a.k.a. Buy Now, Pay Later) that help you pay for your purchases in multiple transactions and also allows users to sell the NFTs in just 1 click if they do not want the loan repayments anymore.
Purchasing an NFT involves selecting a piece, placing a bid or buying at a fixed price, and executing the transaction using cryptocurrency. Each marketplace has its procedure, but the common denominator is the need for cryptocurrency, usually Ethereum (ETH), to complete the purchase.
Three Challenges of Buying NFTs in India with Solutions
Taxation
There is a steep 30% tax on profits from NFTs and cryptocurrencies in India (as per Indian Income Tax Act). So make sure to buy with utmost care, if you are selling NFTs at a loss, your loss won’t be offset with your profits and you will have to pay 30% flat tax on profits.
Hence, it is best to buy ETH and the buy NFTs. Also, make sure to hold it for a good amount of time before selling. This will not only maximize your chances of profit, but also will ease your tax calculations.
Also, do not convert frequently between NFTs and fiat (INR). There is an additional 1% tax for each Fiat-NFT transaction.
Audits
Audits are mandatory for those who exceed $1200 (approx) in transaction value per year. Since this is a very low range, we presume every other NFT owner will have crossed this limits.
However, audits are very easy in India. You just need to go to your nearest Chartered Accountant and provide your bank statements. They will issue you an audit report. Generally it costs around $10-$50 with local accountants.
Bans
Frequent bans on crypto entities are expected to be common in India until comprehensive laws kick-in. You do not need to do anything particular. Just keep an eye out.
Conclusion: Navigating the NFT Landscape in India
The journey into the world of NFTs in India is filled with both excitement and challenges. From understanding the underlying technology to setting up a digital wallet and navigating marketplaces, each step offers a learning opportunity.
While there are hurdles to overcome, particularly in the realms of regulation and taxation concerns, the potential for returns on NFT investment is immense. Yet, if you are able to buy a good NFT during these tough times, you might see a decent profit in the near future.