India said it will introduce a central bank digital currency and proposed a hefty 30% tax on income from cryptocurrencies.
The Reserve Bank of India’s digital currency will be introduced during the fiscal year commencing in April and it will use blockchain and other technologies, said Finance Minister Nirmala Sitharaman during a budget speech today.
Noting that there has been a phenomenal increase in transactions in virtual digital assets, she said it is imperative that income from its transfers be taxed. No deductions would be allowed against such income and any losses from it cannot be set off against other income, she said.
The central bank digital rupee will encourage the further adoption of digital payments, she added. It will also lead to cheaper currency management and be a big boost for the economy, Sitharaman said.
Great News
“Great news!’’ tweeted Nischal Shetty the founder of cryptocurrency exchange WazirX. ‘’ More crypto adoption on the way. Glad to know that RBI will now start getting deeper into crypto. Hope to see banks start getting involved with crypto industry as well.’’
Cryptocurrency transactions would also attract a tax deduction at source of 1% while gifting of virtual digital assets will be taxed in the hands of the receiver, Sitharaman said.
The RBI had announced earlier that its digital currency would have a phased implementation.
“The fact the the RBI and finance ministry recognize the potential of transferring value on the blockchain bodes well not just for CBDCs, but also the entire crypto paradigm,” said Ajeet Khurana, founder of Genezis Network, a think tank for crypto-start-ups.
- By Indrajit Basu
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