The Finance Minister of India announced plans to launch a digital currency that is expected to boost the country’s economic growth.
Nirmala Sitharaman, India’s Finance Minister, announced on Tuesday, February 1, that the nation plans to launch a central bank digital currency (CBDC) by 2022 or 2023 as part of this year’s budget discussion. The digital rupee should help boost India’s economy, Indian Express reports.
The Minister emphasized the importance of digital inclusion across a number of business verticals and announced a fund allocation within the Union Budget. Commenting on the launch of a CBDC, she said that digital currencies could make a cheaper and more efficient currency management system possible.
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Digital currency will also lead to a more efficient and cheaper currency management system. It is therefore proposed to introduce the digital rupee using blockchain and other technology to be issued by the Reserve Bank of India starting, 2022 and 2023.
Alongside the news about the digital rupee launch, Sitharaman also announced a new digital tax. Income from the transfer of digital assets will be charged a 30% tax, with an additional 1% tax on the transaction. She stated:
No deductions in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.
The decision to implement a tax on digital assets was perceived positively by Indian financial experts and legal representatives.
A central bank digital currency acts as a digital form of fiat currency. Like other cryptocurrencies, it’s backed by a blockchain. The key feature of a CBDC is that it’s regulated by the central bank.
Abhay Sharma, member of the International Fiscal Association, said that the introduction of a CBDC would be a big step in making digital currency mainstream, saying it was “indicative of an increasing acceptance by the government of digital currencies within the economic framework.”
CEO of BankBazaar, Adhil Shetty, said it was good that the taxation of virtual taxes was clearly defined as people now know what tax fillers to expect this year.
According to sources, a parliamentary research group has scheduled a crypto-focused training session for Wednesday, February 2. Prior to the 2022 Union Budget announcement, the Indian government had plans to introduce a bill that would ban “all private cryptocurrencies in India” with some exceptions.
