Union Finance Minister Nirmala Sitharaman on Tuesday tabled her career's 4th Union Budget 2022 and as expected made some important and big announcements. Among the various big announcements, a series of announcements on its digital economy shows the government of India's seriousness on the regulation of cryptocurrencies.
While Nirmala Sitharaman did not mention whether the Centre will legalise any private cryptocurrencies, the Finance Minister announced that the digital rupee will be issued using blockchain and other technologies by RBI starting 2022-23. As per FM Nirmala Sitharaman, this will give a big boost to the economy. Furthermore, Sitharaman proposed that any income from the transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.
It is pertinent to mention here that India is not the only country attempting to implement a digital legal tender system. Various central banks throughout the world are experimenting with projects such as the digital dollar, e-yuan, and digital euro. Unlike Bitcoin, which is a cryptocurrency based on blockchain technology that allows users to remain anonymous, the RBI will endorse the official digital currency. For all transactions, the digital rupee is equivalent to a physical rupee. The value of a digital rupee will be the same as the value of a physical rupee.