As a means to boost the country’s economic growth, Indian finance minister Nirmala Sitharaman announced the launch of a central bank digital currency (CBDC) by 2022-23.
While announcing the fund allocation in the Union Budget, Sitharaman highlighted the importance of digital inclusion across numerous business sectors.
In addition to introducing a digital rupee, she said that the establishment of a CBDC will significantly boost the digital economy. Digital currencies also offer the possibility of a more efficient and cheaper currency management system.
“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.”
Complementing the launch of a digital version of the Indian rupee, Sitharaman also proposed the introduction of a 30% crypto tax that targets all transfers of virtual digital assets. She suggested:
“Any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deductions in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.”
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Moreover, the minister of finance stressed that any other source of income cannot offset any losses incurred while transacting digital assets. Consequently, investors will not be able to show losses or hacks of cryptocurrencies to offset taxation on profits.
In order to track crypto investments in the country, Sitharaman also proposed a tax deduction at source (TDS) of 1% above a yet-to-be-determined threshold.
Indian media outlet Lok Sabha reports that a parliamentary research group is organizing a crypto-focused training for tomorrow, Feb. 2.
Excerpt from Jan. 31 Lok Sabha publication