Sunday, March 26

India announces the creation of the digital rupee and taxes on cryptocurrencies


India on Tuesday announced major measures to boost its digital economy, including the creation of a digital rupee to make it easier to manage the currency, and the application of a 30% tax on income from transfers of virtual digital assets, such as cryptocurrencies and NFTs, turning its previous policy on its head.

This was announced today by the Minister of Finance, Nirmala Sitharaman, in the presentation of the general state budgets for the next Indian fiscal year, which begins in April of this year and ends in March 2023.

Sitharaman reported that the Reserve Bank of India (RBI) will issue this digital rupee during the fiscal year 2022-2023, which through blockchain technology “will give a great boost to the digital economy and lead to a management system more efficient and economic currency”.

Unlike other cryptocurrencies, which do not depend on any central bank, the future Indian currency will follow the regulations established by the RBI and its value will be equal to that of the real rupee. Currently, several Caribbean countries and Nigeria are the only ones that have officially approved this payment method, through a virtual version of their currency. Other nations, such as China, have launched pilot projects to test the potential of this practice.

The current Indian government already expressed its interest in creating a digital currency last year, when it announced a bill to restrict private cryptocurrencies in India and at the same time create a legal framework for the creation of a digital currency issued by the central bank. .

A measure that, however, has not yet seen the light, despite the fact that it was scheduled to be discussed during the sessions of the winter period of Parliament, which were held between November and December 2021.

Taxes

In its attempt to limit the action of private cryptocurrencies in the country, the Executive also notified today that it would introduce a 30% tax on transfers of virtual digital assets, where cryptocurrencies and NFTs are framed.

“I propose to provide that any income from the transfer of any virtual digital asset be taxed at a rate of 30%. No deduction shall be allowed with respect to any expense or allowance in computing such income, except the cost of acquisition,” Sitharaman said. . This marks a shift from India’s previous position on cryptocurrencies.

In 2019, the current government tried to present a draft law to ban digital currencies that provided for prison sentences of up to ten years for possession, use or mining of cryptocurrencies, after a committee formed by the Ministry of Finance recommended its prohibition.

But in May 2020, the Indian Supreme Court ruled the RBI blocking of cryptocurrencies illegal and asked the government to regulate this gray area of ‚Äč‚ÄčIndian law.



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