In a major boost to the digital economy, Finance Minister Nirmala Sitharaman announced that digital rupee – using blockchain and other technology – will be introduced by the central bank in 2022-23.
“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,” Ms Sitharaman said today.
“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,” she said.
Blockchain technology also powers cryptocurrency, non-fungible tokens (NFTs) and it is a distributed ledger, updated in real-time. In a blockchain, the transaction records cannot be changed at all and the ledger is transparent and authentic, which is why it is used in cryptocurrency as well
The RBI has been working on a phased implementation strategy for its digital currency. It is expected that the tax regulation of such currency is also made clear, as there are aspects of classification (capital asset or otherwise), rate of taxation, disclosure requirements that have to be addressed.
The Budget has also proposed scheme for taxation of virtual digital assets. Income from virtual digital assets will be taxed at 30%
Finance Minister Nirmala Sitharaman said that it cannot be mentioned as a replacement of any other income and 1% TDS to be charged further on payments made using digital assets to keep a track on transactions.
No deduction other than cost of acquisition will be allowed. Transaction details to be captured by way of TDS on sale.