After Nigeria launched its digital currency, more countries have ramped up efforts to join the CBDC community. Now, India’s central bank has announced plans to launch its digital version of the rupee in the next financial year.
The Indian government also plans to tax cryptocurrencies and NFTs as the country moves closer to recognizing cryptocurrencies as legal tender, unlike Nigeria where the CBN has banned financial institutions from dealing in cryptocurrency.
This is according to Nirmala Sitharaman, Minister of Finance and Corporate Affairs of India, while delivering the country’s annual budget. The Reserve Bank of India will introduce the digital rupee in the 2022-2023 financial year which begins on Apr. 1.
What the Reserve Bank of India is saying
Nirmala Sitharaman said, “Introduction of a central bank digital currency will give a boost, a big boost to the digital economy, Digital currency will also lead to a more efficient and cheaper currency management system.”
Sitharaman gave no details about how the digital rupee would work or what it would look like but said it would be introduced using blockchain and other technologies.
The term “blockchain” refers to the technology that was developed in tandem with bitcoin, but the definition has grown as the technology’s applications have expanded beyond cryptocurrencies.
The income from the transfer of any virtual assets will be taxed at 30%, according to Sitharaman. She also advocated a 1% tax deduction at source on payments made relating to the purchase of virtual assets to record data of all such crypto transactions.
“No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition. Further, loss from the transfer of digital assets cannot be set off against any other income,” she said in one of New Delhi’s most remarkable tech and business-focused federal budgets.
“Gift of virtual digital asset is also proposed to be taxed at the hand of the recipient,” she added.
