GST on virtual currencies

In this paper the endeavor is to examine the Goods and Service tax treatment of various activities related to Crypto Assets, especially Virtual Currency, from its invention to mining to trading etc., in the light of the OECD report - OECD (2020), Taxing Virtual Currencies: An Overview of Tax Treatments and Emerging Tax Policy Issues, OECD, Paris. www.oecd.org/tax/tax-policy/taxing-virtual-currencies-an-overview-of-tax-treatments-and-emerging-tax-policy issues.htm and inputs from the judgment dated 04.03.2020 of Hon’ble Supreme Court rendered in the case titled Internet and Mobile Association of India Vs RBI.

1.1 Before we examine the various aspects of tax treatment relating to virtual currency, let us first understand the various nuances of the virtual currency.

Understanding Virtual currencies

2. Virtual Currency (VC), also known as Crypto Currency or Crypto is a Crypto Asset. The term crypto-asset is commonly used to refer to types of digital financial assets that are based on distributed ledger technology (DLT) like blockchain technology and cryptography as part of their perceived or inherent value. The World Bank Group defines DLT as follows:

“a novel and fast-evolving approach to recording and sharing data across multiple data stores (ledgers), which each have the exact same data records and are collectively maintained and controlled by a distributed network of computer servers, which are called nodes”.

The Financial Action Task Force (FATF) defines a ‘virtual asset’ as

“a digital representation of value that can be digitally traded or transferred, and can be used for payment or investment purposes.”

The expression ‘crypto-assets’ is commonly considered by regulators and researchers around the globe to cover three main categories of digital financial assets that are based on distributed ledger technology (DLT).

2.1 The three categories are:

(i) payment tokens (also known as cryptocurrencies or virtual currencies),

(ii) security tokens and

(iii) utility tokens.

Payment Tokens (i.e. Virtual Currencies)

Security (or Asset and financial) Tokens

Utility (or consumer) Token

Intended to operate most similarly to traditional, fiat currencies.

Usable as a means of exchange for goods or services and possibly also as a store of value and unit of measurement.

Referred to as Crypto Currency or Virtual Currency.

Examples: - Bitcoin, Litecoin, Ether

Designed as tradeable assets that are held for investment purpose and classified as security (or equivalent) under applicable laws.

Examples: - Spice, tZero, BCAP.

Their primary use is to facilitate the exchange of or access to specific goods or services.

They may for instance, act as a license to allow the holder access to a particular service, as a pre-payment or voucher for a good or service (even where that good or service is not yet available).

Examples: - Storj – a token that provides access to a peer-to-peer network cloud storage service.

Basic Attention Token – used by the Brave search-engine to reward users for their search data.

2.2 The term “virtual currency” also includes more recently developed forms of payment tokens that are backed with real assets (e.g. securities or fiat currencies), which aim to be more stable and that are therefore called “stablecoins”. Stablecoin is designed to have a relatively stable price, typically through being pegged to a commodity or currency or having its supply regulated by an algorithm. Finally, another evolution of virtual currencies is the concept of a “central bank digital currency” (CBDC), which would be backed by public authorities and which is under consideration in a number of countries to provide an alternative to other forms of virtual currencies.

2.3 Some crypto-assets cannot be classified under any of these categories. In contrast, there are also several types of crypto-assets that can be classified under multiple categories.

3. Various stages of Virtual Currency

3.1 Creation of virtual currency

When a new virtual currency is created, one of the first steps is to ensure that it is available in the hands of potential users. This can occur in a number of ways, including through airdrops, an initial token offering(ITO), mining and/or forging:

· Airdrops: an airdrop is the distribution of tokens without compensation (i.e. for free), generally undertaken with a view to increasing awareness of a new token, particularly amongst “influencers”, and to increase liquidity in the early stages of a new token project.

· Initial Token Offering (ITO): also known as an Initial Coin Offering (ICO), an ITO involves the issuance of a new token, which is often issued in exchange for one of the major virtual currencies e.g. Bitcoin, or in some cases, fiat currency. The majority of ITOs to-date have involved the issuance of utility tokens, rather than security tokens or virtual currencies.

3.2 Mining: refers to the process in some distributed-ledger protocols by which transactions of virtual currencies are verified and are added to the blockchain-based ledger (record of transactions). The “miner” (the person on the network undertaking the necessary computer processes by being the first to solve complex equations, typically under a ‘proof of work’ protocol) may be entitled to (i) a mining reward, paid through new tokens, and/or (ii) a protocol transaction fee, which is a percentage of the value of the transaction being processed and is paid from that transaction.

3.3 Forging: this is often termed more commonly as staking and refers to the process through which transactions are verified when a DLT uses a ‘proof of stake’ mechanism, as described above.

3.4 Storage and transfer: In order to hold a token, users require a wallet. Each wallet consists of one, or multiple, digital wallet addresses.

Types of digital wallets for holding crypto assets: -

· Hot custodial wallet: a wallet that is connected in some way to the internet (i.e. “hot”) and which is managed by a third party (e.g. TrustVault), whereby the third-party holds the user’s private keys – these are a form of cryptography that allows the user to access the wallet, which is an element of security.

· Hot non-custodial wallet: also connected to the internet, the user downloads a software application to create the wallet on their own computer, whereby the user retains control of their private keys. Examples include Copay and Electrum.

· Cold hardware wallet: a physical device (similar to a USB/flash drive) that is kept offline (i.e. “cold”) but which can be connected to an online computer when needed (e.g. Trezor and Ledger Nano S).

· Cold paper wallet: pieces of paper on which the digital address and private key are recorded. They can be generated by downloading a piece of software, which is then run on an offline computer and printed, before deleting the wallet before the computer is re-connected to the internet. (e.g. Paper Wallet and Walletgenerator.net).

3.5 Exchange: In order to find potential token purchasers or sellers, a user may use a virtual currency exchange or an over the counter (OTC) broker through a peer-to-peer network or a third-party intermediary. These services may facilitate the exchange of one unit of virtual currency for goods and services, for another type of virtual currency, for another type of crypto-asset, or for fiat currency.

3.6 Then there are rental companies, who provide the computer hardware and software to the miners to undertake the mining activities.

4. Tax Treatment of Virtual Currencies

4.1 How should GST/VAT systems treat the creation, acquiring, holding and transfer of these assets in view of their hybrid characteristics including both aspects of financial instruments and intangible assets is a challenge. It is viewed that majority of countries refer to the virtual currencies as intangible assets, some consider them as commodities or financial instruments. A minority of countries take a different approach and consider virtual currencies as foreign fiat currencies.

4.2 An intangible asset is “an identifiable non-monetary asset without physical substance”. A virtual currency fits the definition of an intangible asset as “(a) it is capable of being separated from the holder and sold or transferred individually; and (b) it does not give the holder a right to receive a fixed or determinable number of units of currency.”

4.3 The tax treatment of a crypto asset would depend on their classification as ‘virtual currencies’, ‘security tokens’ or ‘utility tokens’. In order to correctly classify crypto-assets as ‘virtual currencies’, ‘security tokens’ or ‘utility tokens’ or under any other category, their economic purpose, the rights and liabilities associated with the assets, and the way the assets derive their inherent value are all relevant.

4.4 Different types of tokens will require a different type of classification for accounting purposes and tax purposes. For example, a security token, which provides the owner with a contractual right to cash or another financial asset, could be considered as a financial asset subject to International Financial Reporting Standards (IFRS) 9 (PWC, 2019[17]); while utility tokens, which represent a right to receive future goods or services, can be considered as a prepayment for those goods and services, and could therefore be treated as such under IFRS 15.

4.5 Virtual currencies cannot be considered as financial assets as these assets are neither equity nor do they give rise to contractual rights for its holder to receive cash or to exchange financial assets or financial liabilities with another entity. Some virtual currencies can be used in exchange for goods and services, accordingly, they cannot be classified as cash, because no virtual currency “is used as a medium of exchange and as the monetary unit in pricing goods or services to such an extent that it would be the basis on which all transactions are measured and recognised in financial statements.”.

4.6 Virtual currency vis-à-vis Money: Money performs three different functions: (1) a unit of account, (2) a means of exchange and (3) a store of value, which may better correspond to the concept of virtual currencies. Virtual currencies do not seem to fulfil all three of the economic roles associated with money. Almost all countries appear to take the view that virtual currencies are not equivalent to sovereign currencies.

4.7 It may be noted that the Hon’ble Supreme Court in its judgment dated 04.03.2020 in the case titled Internet and Mobile Association of India Vs RBI, while observing that various courts in different jurisdictions have identified virtual currencies to belong to different categories ranging from property to commodity to non-traditional currency to payment instrument to money to funds and that promissory notes, cheques, bills of exchange etc. are also not exactly currencies but operate as valid discharge (or the creation) of a debt only between 2 persons or peer-to-peer, has held that it is not possible to accept the contention that VCs are just goods/commodities and can never be regarded as real money. The relevant paras of the judgment are extracted below: -

6.84. The ruling of the European Court of Justice in Skatteverket v. David Hedqvist, was with particular reference to the identity of virtual currencies. ECJ was in this case asked to decide a reference from Supreme Administrative Court, Sweden on whether transactions to exchange a traditional currency for the ‘Bitcoin’ virtual currency or vice versa, which Mr. Hedqvist wished to perform through a company, were subject to value added tax. The opinion of the court was to the effect that:

(i) Bitcoin with bidirectional flow which will be exchanged for traditional currencies in the context of exchange transactions cannot be categorized as tangible property since virtual currency has no purpose other than to be a means of payment.

(ii) VC transactions do not fall within the concept of the supply of goods as they consist of exchange of different means of payment and hence, they constitute supply of services.

(iii) Bitcoin virtual currency being a contractual means of payment could not be regarded as a current account or a deposit account, a payment or a transfer, and unlike debt, cheques and other negotiable instruments (referred to in Article 135(1)(d) of the EU VAT Directive), Bitcoin is a direct means of payment between the operators that accept.

(iv) Bitcoin virtual currency is neither a security conferring a property right nor a security of a comparable nature.

(v) The transactions in issue were entitled to exemption from payment of VAT as they fell under the category of transactions involving ‘currency [and] bank notes and coins used as legal tender’.

(vi) Article 135(1)(e) EU Council VAT Directive 2006/112/EC is applicable to non-traditional currencies i.e., to currencies other than those that are legal tender in one or more countries in so far as those currencies have been accepted by the parties to a transaction as an alternative to legal tender and have no purpose other than to be a means of payment.

The court accordingly concluded that virtual currencies would fall under this definition of non-traditional currencies.

6.85. Thus (i) depending upon the text of the statute involved in the case and (ii) depending upon the context, various courts in different jurisdictions have identified virtual currencies to belong to different categories ranging from property to commodity to non-traditional currency to payment instrument to money to funds. While each of these descriptions is true, none of these constitute the whole truth. Every court which attempted to fix the identity of virtual currencies, merely acted as the 4 blind men in the Anekantavada philosophy of Jainism, (theory of non-absolutism that encourages acceptance of relativism and pluralism) who attempt to describe an elephant, but end up describing only one physical feature of the elephant.

6.86. RBI was also caught in this dilemma. Nothing prevented RBI from adopting a short circuit by notifying VCs under the category of “other similar instruments” indicated in Section 2(h) of FEMA, 1999 which defines ‘currency’ to mean “all currency notes, postal notes, postal orders, money orders, cheques, drafts, travellers’ cheque, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments as may be notified by the Reserve Bank.” After all, promissory notes, cheques, bills of exchange etc. are also not exactly currencies but operate as valid discharge (or the creation) of a debt only between 2 persons or peer-to-peer. Therefore, it is not possible to accept the contention of the petitioners that VCs are just goods/commodities and can never be regarded as real money.

4.8 The gist of the Hon’ble Supreme Court’s judgment is that the virtual currency as a whole has hybrid characteristics and whether the same qualifies as property or commodity or payment instrument or funds would depend on the economic purpose, the rights and liabilities associated with the crypto assets, and the way the assets derive their inherent value.

5. Treatment of virtual currencies in EU Member States

5.1 Whether exchanges of virtual for fiat currency were a taxable supply under Article 2(1) of the EU VAT Directive; and if so, whether Article 135(1) of that Directive meant that those exchange transactions are VAT exempt. The ECJ held that virtual currencies were comparable to fiat currencies in that their sole purpose was to provide a means of exchange. The Court therefore ruled that transactions including the exchange of fiat currency for virtual currencies and vice versa, performed for consideration, are transactions exempt from VAT.

Activity

Subject to VAT?

If so, exempt?

Use of Bitcoins for acquiring goods or services

Out of scope: No VAT should be levied on the value of the Bitcoins themselves.

Supplies of goods or services, subject to VAT, remunerated in Bitcoins

Taxable: The supply of goods and services, subject to VAT and remunerated by way of Bitcoin, would for VAT purposes be treated in the same way as any other supply. VAT should therefore be levied on the goods or services provided.

Services supplied by digital wallets

Out of scope: A large majority of the services supplied by digital wallet providers are free of charge, which sees these transactions falling outside the scope of VAT.

Taxable: If, however, some digital wallet providers ask for payment of fees in exchange for their services, it seems that the transaction would be taxable.

Exempt: Such services could however be seen as exempt pursuant to Article 135(1)(e) of the VAT Directive, on the grounds of them being transactions directly concerning currency.

Not exempt: It seems that services supplied by digital wallet providers could not be exempt pursuant to Article 135(1)(d) of the VAT Directive.

Mining Activities

Out of scope: The fact that the payment of a transaction fee by a Bitcoin user is not a necessary condition for successfully sending Bitcoins (and thus for receiving a verification service supplied by the miner) may be indicative of there not being a direct link between the consideration and the service.

Besides, the provision of a mining service does not create for the miner the right to receive a consideration in exchange, which could imply the non-existence of a legal synallagmatic relationship between him and the recipient of the verification services (the user whose transaction request the miner has validated).

Taxable: New bitcoins received automatically by the miner from the Bitcoin system every time that a verification service is supplied could possibly be seen as constituting a consideration for a taxable service.

Despite the fact that Bitcoin transactions carried out for free are in theory possible, in practice Bitcoin users pay fees (used as a default by most digital wallets); and it seems almost impossible to imagine users would be willing to wait days or weeks, before a transaction is verified (which could be the case if no fee is paid).

Exempt: Mining activities could be seen as exempt pursuant to Article 135(1)(e) of the VAT Directive, on the grounds of them being services directly concerning currency.

Exempt: Mining activities could be treated as exempt pursuant to Article 135(1)(d) of the VAT Directive on the basis of them fulfilling in effect the specific, essential functions of an exempt supply (the transfer of bitcoins itself).

Services related to intermediation supplied by exchange platforms

Taxable: Services for consideration supplied by exchange platforms acting as intermediaries would be taxable.

Not exempt: Exchange services could not be seen as exempt pursuant to Article 135(1)(e) of the VAT Directive.

5.2 Article 135(1) of the EU VAT Directive

(1) Member States shall exempt the following transactions:

“…(d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;

“(e) transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest;

“(f) transactions, including negotiation but not management or safekeeping, in shares, interests in companies or associations, debentures and other securities, but excluding documents establishing title to goods, and the rights or securities referred to in Article 15(2);”

5.3 The VAT treatment of exchanges in virtual currencies is relatively consistent across EU Member States. However, there remain some differences in the treatment of mining income and the treatment of related services. For example, mining activities are typically treated as out of the scope of VAT (for example, in Germany, Ireland, Slovenia and Sweden), as both the mining rewards and the transaction fees are not regarded as having a sufficient link between the payment and the activity. In France, however, revenue from mining activities is considered taxable as a supply of services.

5.4 Similarly, there is some variation in the approach adopted by EU Member States with regard to the taxation of related services. For instance, Germany treats the provision of wallet services for consideration, and of exchange services offered to third parties, as taxable under VAT; whereas other countries provide an exemption for one or both of these related services. Slovenia treats the provision of wallet services to be closely related to the exchange of virtual currencies and therefore exempt from VAT, while treating the provision of online exchange services as taxable at the standard VAT rate.

5.5 In Italy, exchange services are treated as exempt from VAT, in line with the treatment of other foreign currencies.

5.6 Other crypto-assets may be treated differently for VAT purposes in the EU. It should be noted that the distinction between payment instruments and vouchers is relevant in the EU Member States, as it affects the VAT treatment of related services (payment services being exempt). Therefore, the distinction between payment instruments and vouchers may also be relevant when characterising and drawing the line between the different types of tokens (especially between payment and voucher-like utility tokens). In addition, according to the established legal praxis of the ECJ, a supply of services rendered for consideration is subject to VAT when a direct link can be established between the service provided and the consideration received. For instance, in an ICO or an airdrop where utility tokens are issued it may be difficult to identify the link between the service rendered and the corresponding price.

6. GST treatment of Crypto Assets in India

6.1 The GST treatment of different crypto assets i.e. ‘payment token’, ‘security token’ and ‘utility token’ would vary according to their economic purpose, the rights and liabilities associated with them and the way these tokens derive their inherent value.

6.2 It is viewed that commonly the ‘payment token’ is referred to as ‘virtual currency’ and other two tokens are referred to as ‘tokens’. The difference between ‘payment token’ and the other two tokens is that the former is ‘fungible’ token whereas the other two are ‘non-fungible’ tokens. “Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.

6.3 So far as the tax treatment of payment token or virtual currency is concerned, it is viewed that the Hon’ble Supreme Court in its judgment dated 04.03.2020 in the case titled Internet and Mobile Association of India Vs RBI has held that virtual currency can be regarded as real money provided it fulfills the economic purpose, the rights and liabilities associated with the real money. Guided by the said judgment and the global practice amongst majority of the countries, the virtual currency may be treated as money and should be met with the GST treatment accordingly as under: -

Activity

Subject to GST?

ICO/ITO of virtual currency

Out of scope: Transaction in money, No GST should be levied.

Use of Virtual Currency for acquiring goods or services

Out of scope: No GST should be levied on the value of the virtual currency itself.

Supplies of goods or services, subject to GST, payment in Bitcoins

Taxable: The supply of goods and services, subject to GST and remunerated by way of virtual currency, would for GST purposes be treated in the same way as any other supply. GST should therefore be levied on the goods or services provided. However, conversion of VC (bitcoins etc.) in Indian Rs. for valuation would pose challenges.

Services supplied by digital wallets

Taxable: Where the services are supplied for a fee, the same should be liable to GST as supply of service.

Mining Activities

Taxable: New virtual currency received automatically by the miner from the VC system every time that a verification service is supplied could possibly be seen as constituting a consideration for a taxable service. Valuation of service paid in bitcoins, in the absence of conversion rate, may have valuation issues

Services provided by #power rental companies

Taxable: They provide hardware and software for the mining, which qualify as services.

Services related to intermediation supplied by exchange platforms

Taxable: Services for consideration supplied by exchange platforms acting as broker would be taxable.

6.4 It is viewed that in mining activities, new virtual currency is received automatically by the miner from the VC system every time a verification service is supplied. In such an activity, who will be the recipient of the mining service, whether the supplier of virtual currency or the recipient of virtual currency or the VC system? In terms of the section 2(93) of the CGST Act, 2017, the general rule is that “where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration” is the recipient of such supply. Accordingly, the VC system collectively, would be the recipient of the mining service. However, valuation and time of supply of such service may pose challenges. Unlike other foreign fiat currencies, no exchange rate is available for virtual currencies. One possible solution for valuation of such service could be the latest virtual-to-fiat transacted price. However, a mechanism needs to be developed to publish such prices. Similarly, the time of supply of mining services need to be specified, whether the same would be the time when the VC is debited from the supplier’s wallet or the time when the VC is credited to the recipient’s wallet. Since the status of the supplier and recipient of VC is pseudo-anonymous, how such details would be accessed is also a challenge. It is viewed that a whole lot would depend on the regulations of the RBI with respect to the virtual currencies.

6.5 It is seen that in most of the European countries, the mining services have been exempted on the ground that these services facilitate supply of money, which in itself is out of scope supply. Taking a cue from the practice being adopted in these countries and the challenges in tracing the supplier/recipient of the VC, tracing the transaction itself and the valuation of the VC, the mining service may be exempted to facilitate ease of doing business.

6.6 Trading Platforms as ‘Intermediary’: Regarding trading of VC against the Fiat currency or vice-versa or trading of VC to VC, it is viewed that the fee charged by the exchange platform for facilitating such trading is a taxable service. However, so far as the facilitation of trading of VC with fiat currency or vice versa or trading of VC to VC is concerned, the exchange platform would not qualify as an ‘intermediary’, because the definition of intermediary provided under section 2(13) of the IGST Act, 2017 is limited to the facilitation of transactions relating to supply of goods or services or both or transactions relating to supply of securities. Since, the facilitation of trading of VC with fiat currency or vice versa or trading of VC to VC is transaction in money (which is neither goods, nor service nor securities) the same is out of the ambit of intermediary service. Accordingly, going by the default rule, the place of supply of such service would be the location of the recipient of service, if address of recipient is on record of platform.

7. So far as the security token is concerned, the same are issued by various projects and start-ups to raise funds. Under the GST law in India, security is neither goods nor services. However, facilitating or arranging transaction in securities is a service. The meaning assigned to “securities” under section 2(101) of the CGST Act, 2017 is same as assigned in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956, where the terms “securities” has been defined as under: -

(h) “securities” include—

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;

(ia) derivative;

(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;

(ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

(id) units or any other such instrument issued to the investors under any mutual fund scheme;

(ii) Government securities;

(iia) such other instruments as may be declared by the Central Government to be securities; and

(iii) rights or interest in securities;

7.1 It is viewed that the security tokens are issued by various projects and start-ups to raise funds and such token are marketable as the same are tradeable. Accordingly, the security tokens appear to qualify as securities under the GST law in India. However, the tokens issued as security tokens need to be tested against the criterion of their economic purpose, the rights and liabilities associated with them, so as to judge their correct classification. Mere issuing token as security token would not suffice. In the event the security tokens qualify as securities, their GST treatment may be as under: -

Activity

Subject to GST?

ITO of security token

Out of scope: Supply of security itself is neither a supply of goods nor a supply of services.

Services supplied by digital wallets

Taxable: Where the services are supplied for a fee, the same should be liable to GST as supply of service.

Services related to intermediation supplied by exchange platforms

Taxable: Services for consideration supplied by exchange platforms for facilitating or arranging transactions in securities acting as broker would be taxable.

7.2 The tax treatment of security tokens not qualifying as “securities” would be as applicable to goods.

7.3 It is also viewed that where the exchange platform facilitates trading of security tokens, the exchange-platform would qualify as an intermediary and accordingly in terms of section 13(8)(b) of the IGST Act, the place of supply of such facilitation service would be the location of the exchange platform.

8. So far as utility (or consumer) tokens are concerned, they are nothing but virtual vouchers, redeemable against supply of goods or services or both and their GST treatment should be determined accordingly.

8.1 It is viewed that in the Indian context, tax on supply of voucher is applicable on the face value of the voucher. Rule 32(6) provides that: -

the value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both shall be equal to the money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp.

Thus, even if a voucher is supplied on a value higher than the face value of the voucher (value of redeemable underlying supply), the tax is applicable on the face value of the voucher because unlike the global practice, the Indian GST law does not take the higher of the face value and transaction value of the voucher for the purpose of tax. Resultantly, where the voucher is supplied on a value higher than the face value, the difference of transaction value and the face value of the voucher goes untaxed.

8.2 This anomaly needs to be set right. The voucher should be taxed at the face value or transaction value, whichever is higher. Irrespective of whether the voucher is single purpose or multi-purpose.

9. There are other types of NFTs which are issued as collectibles. Such NFTs are digital art work in the form of picture, audio or video and are tradeable. Such NFTs are in the nature of intangible goods and accordingly their tax treatment would be as applicable to goods.

********