New Dehli: India’s central bank RBI is all set to roll out its digital currency. The RBI will launch digital currency in FY 2023, according to Finance Minister.
Presenting the Union Budget 2022 today in the Parliament, FM Nirmala Sitharaman announced that the RBI (Reserve Bank of India) will launch the Central Bank Digital Currency (CBDC) in FY23.
“The introduction of central bank digital currency will give a big boost to the digital economy. Digital currency will also be a more cheaper and efficient currency management system,” said Sitharaman.
The CBDC from RBI will be based on blockchain technology and other technologies, according to Finance Minister.
“It is therefore proposed to introduce digital rupee – using blockchain and other technologies – to be issued by the Reserve Bank of India, starting 2022-23,” stated Sitharaman.
The central bank is in the process of rolling out its digital version of the rupee. This digital rupee or currency will co-exist with bills or cash.
With the proposed launch of CBDC in FY23, India will join countries like China, Tajikistan and Nigeria that have rolled out CBDC in recent times.
The latest move on digital currency by the Indian government has received a positive response from industry experts and top executives.
“The proposal to start digital rupee by 2022/ 2023, only indicates that the government is abreast of the changes taking place around the world and will take lead in granting approvals and investments. This also gives assurance to individuals that digital currencies will not be outlawed,” said Abhishek Malhotra, Managing Partner, TMT Law Practice.
“It is encouraging to see the announcement on central bank digital currency using blockchain as it will further reduce dependency on cash and could potentially give significant impetus to the digital payments ecosystem,” said Srividya Kannan, Founder and Director – Avaali Solutions.
According to VRXtream Co-Founder and CEO Jai Prakash, although the government has not proposed any bill on crypto, the two regulatory clarifications from the FM has made a lot of things clear for this nascent but booming industry.
“It is wonderful to know that RBI will introduce blockchain-powered digital currency. This would certainly give an impetus to the participation of institutional players in the blockchain space,” said Prakash.
However, Finance Minister Sitharaman also said that income from the transfer of any virtual digital asset shall be taxed 30% and there won’t be any deductions and exemptions.
Sitharaman added that transfer of such assets cannot be set off against any other income and such transaction will attract a 1% tax deduction at source including digital gifts received.
“Cryptocurrency has been brought into the tax net of 30% which is a welcome move, as the same does not seem to be subject to a complete ban anymore. Further, as gains from its trading will also be taxed now, this will bring in some faith in the investors,” commented Malhotra of TMT Law Practice.
“The announcement of a 30% tax on the transfer gains of digital assets is most welcome as it establishes the legitimacy of crypto trading in India,” added VRXtream’s Prakash.
“Hoping to see that as the new class of assets finds more traction with the people, cryptocurrencies are recognised and widely adopted as the alternative investment vehicles,” commented Prakash.