The 2023 change that closed the old escape
For years, selling a self-built intangible like a domain or website carried a surprising advantage. Because you never bought the asset, it had no cost of acquisition, and the Supreme Court in B.C. Srinivasa Setty had held that you cannot charge a capital gain where the cost is not ascertainable. So many self-generated assets fell outside the capital-gains net entirely.
That door is now largely closed. The Finance Act 2023 amended Section 55 to add any other intangible asset or any other right to the list of assets whose cost of acquisition is deemed to be nil, with effect from the 2024-25 assessment year. Once the cost is deemed nil, the computation no longer fails, and the entire sale consideration becomes a taxable capital gain under Section 45. So for a domain or website sold from that year onwards, do not rely on the old no-cost argument, it no longer works. The Setty principle still governs only sales made before the 2024-25 assessment year, or genuine disputes over whether a particular digital asset is really an intangible asset or right at all.
Sale, business or licence, and the NRI angle
How the money is taxed still depends on what you are really doing. If you sell a domain or website you held as an investment, it is a capital gain, long-term or short-term depending on how long you held it, now on the full consideration. If you are in the business of building and flipping sites, the profit is business income taxed at slab rates, not a capital gain. And if you do not sell at all but licence the site, or earn advertising or subscription revenue from it, that is royalty or business income rather than a capital gain, taxed on a different footing.
For an NRI, the Indian angle turns on nexus. A website aimed at an Indian audience, a .in domain, or an asset otherwise connected with India, produces Indian-source income on sale, so the buyer must withhold TDS under Section 195, the section for payments to non-residents, renumbered to Section 393(2) under the Income-tax Act, 2025 from FY 2026-27. The character of the receipt, capital gain, business income or royalty, decides the rate and which treaty article applies. A practising CA fixes the character, computes the gain correctly under the current nil-cost rule, and gets the buyer's withholding right so you are not over-deducted.