NFTs are on top of the world these days. Everything from top art pieces to memes is being sold as NFTs and it has quickly become one of the most profitable niches within blockchain. Even as NFTs are fast becoming mainstream, there will be a few regulatory aspects to iron out.
Naturally, one of these is taxes and how they will be handled for NFTs. For example, top Indian actor Amitabh Bachchan was recently caught up in some NFT tax issues as he had been forced to pay approximately $136,000 in taxes after some of his NFTs were listed.
NFTs and Taxes
This new tax bill came shortly after India’s Directorate General of Goods and Services Tax Intelligence (DGGI) opened an investigation into BeyondLife.club, a platform where his NFTs were being sold as of November 2021.
Following the investigation, the DGGI found that he had not paid taxes on the sale of up to $1 million worth of his NFTs that had been sold. Some of the NFTs in question included his own recitation of poems from the collection Madhushala, vintage posters of his iconic films, and signed posters as well.
The site is a collaboration between Rhiti Entertainment, which Bachchan partnered with for the sale of his exclusive NFTs, and, GuardianLink.io. While the payment of the tax bill has reportedly been made, the Bollywood actor has not given any official statement.
The DGGI has also confirmed that its investigation will continue despite the payment of the tax bill. This does bring into focus the importance of the comprehensive treatment of NFTs by tax authorities. While the crypto industry waited several years before tax codes recognized them, NFTs have had an easier ride so far.
NFTs: The New Celebrity Status Symbol
In the midst of all of this, it is worth considering the implications of celebrities getting involved in the NFT space. While we are used to celebrities releasing clothing lines and perfumes, many more are selling their own NFTs.
From Grimes to Lindsay Lohan, celebrity involvement in the NFT space can generate buzz and drive sales, as we can see in Bachchan’s case. When issues like the current tax debacle happen, it also draws a lot of attention.
Seeing as NFTs have been accused of being money-laundering and tax evasion schemes in the past, it is refreshing to see a high-profile case of the law being followed. This is also timely given that tax codes regarding NFTs are being developed around the world, even as NFTs are defining themselves separately from cryptocurrency on the world stage.
As more celebrities get into the NFT space and release more collections, the reporting of income and enforcement of tax codes will likely become stricter. Ultimately, this is for the benefit of the industry. Not only will it put the NFT space in good standing with regulatory bodies, but it will also endear it more to the public.