New Delhi: India will soon release it's own digital currency which will provide a huge boost to the economy, announced Finance Minister Nirmala Sitharaman during her Budget Speech today.
Presenting her fourth Budget, Sitharaman said that the digital currency will be issued by the Reserve Bank of India (RBI) in 2022-23. At the same time, the finance minister announced a 30 % tax on proceeds of virtual or digital assets. The RBI had said in July last year that it was working towards its own digital currency.
No set off will be allowed in case of losses. Also, gifts in virtual digital assets would be taxed in the hands of the recipient, the Finance Minister said.
Calling it Central Bank Digital Currency (CBDC), RBI deputy governor T Rabi Sankar had said that it will be same as a fiat currency and exchangeable one-to-one with the fiat currency. However CBDC would not be comparable to other private currencies being traded like Ethereum or Bitcoin he said, both digital currencies which have raised the hackles of governments around the world regarding economic stability.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, building on a previous version, initially aimed to ban private cryptocurrency operators, and simultaneously empower the RBI to issue CBDC. The Supreme Court nullified a circular issued by the RBI banning cryptocurrencies in 2020 and also set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services with connection to virtual currencies in March this year.
Crypto enthusiasts may be slightly disappointed with the Budget announcement as the government while not banning currencies outright, has opted for a more aggressive method of controlling the proceeds of the market as well as entering as a player itself.
Ahead of the Union Budget announcement this year, speculation was rife regarding the central government's official stance towards cryptocurrencies and any potential taxes that might be imposed on the same. While many imagined that India might ban cryptocurrencies, others suggested that strict regulatory measures might be imposed to keep the digital token transactions under check.