October 27, 2022
By Anjali Kochhar
Diwali is around the corner and we know that you must be looking for a perfect gift to give to your loved ones. Right? What if we tell you that this Diwali, rather than gifting sweets, gift hampers, or gold, you can gift non-fungible tokens to your loved ones? Seems exciting right?
NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. These digital assets have gained immense popularity among netizens. From individuals to brands, everyone loves the several real-world use cases of NFTs. Even though the market seems down, the craze of investing in NFTs is not going anywhere any soon.
Asif Kamal, the founder of Web3 fine art fintech startup Artfi, says, “Giving a high-quality NFT as a gift can be a way to teach a loved one about the world’s latest technologies. It may also be a way to join a community together. For example, basketball fans may like to share NBA Top Shot NFTs as a way to express their love for their favourite team.”
weTrade’s CEO Prashant Kumar believes that NFTs are good gifting options this Diwali as they are unique and largely safe from plagiarism. The company offers an NFT for every login. User can claim their NFT once they log in to the app and share the NFT on their Facebook, Twitter or LinkedIn feed, Kumar explains.
Poorvi Sachar, Head of Operations, Tezos India, believes that NFTs and crypto tokens that can be held in wallets or used to purchase NFTs and on other crypto enabled platforms to buy commodities are among the best gifting options this Diwali.
Dileep Seinberg, Founder and CEO of MuffinPay, says that NFTs can be an interesting gifting option for your loved ones.
“You can digitize and make the precious moments with them immortal forever. This would be a unique idea of sharing precious moments among the family and friends, which can be valued, stored and heritaged for years,” he says.
He revealed that MuffinPay is planning NFT Diyas (lamps) for gifting purposes for peers and the companies. The entire proceeds from this cause will be utilized towards noble and social causes for the betterment of society.
Anmol Chawla, founder of TaxCryp, believes that both individuals or companies can make best use of crypto gifting for new age millennials, as prospect of receiving crypto will be exciting for them. Digital assets are fairly easy to buy and send, and for the receiver it can both be an investment or they may convert it to fiat, he said.
While gifting NFTs can be an amazing investment option, Medha B Dey Roy, Head of Branding at KuCoin India, believes that one must be mindful of the kind of knowledge they share with their peers to evaluate their perception of crypto.
“In case your receiver doesn’t know how to access or secure their crypto, it might be wiser for you to tell them how to deposit or transfer. It will be an exciting gift for the receiver,” she adds.
How to gift NFTs?
If you don’t already have an NFT collection to gift, this Diwali, then you will need to buy one. Most NFT marketplaces only accept Ethereum, so you may have to purchase some of that virtual currency before bidding. You will also need a digital wallet to store NFTs and the cryptocurrency used to acquire them.
Several NFT marketplaces are there online, and each functions slightly differently, including in terms of what assets they trade. Some sell a bit of everything, while others specialize in certain niches, such as sports and gaming.
Once you’ve found a suitable marketplace and obtained all the right tools to trade, it’s time to set up an account and start buying.
After making the purchase, the next step is to transfer the NFT to the person to whom you want to gift it. Many NFT marketplaces now offer this option, and it can usually be achieved with a few clicks of a button.
NFT gifts tax considerations
It should be noted that gifts surpassing $16,000, or $32,000 if made by a couple, are taxable events in the eyes of the Internal Revenue Service (IRS)—unless the recipient is your spouse.
If you plan to be this generous and risk exceeding the lifetime gift tax exemption, which is set at $11.7 million, then you might be hit with a hefty tax bill. If that’s not an issue, then the only tax liability will lie with the recipient when they eventually decide to sell.
NFTs are subject to capital gains taxes. So, for example, if you bought an NFT for $500, and the recipient then sold it for $1,000, the receiver would be taxed on a capital gain of $500.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.