The Reserve Bank of India (RBI) will roll out the digital version of the rupee in the next financial year. The country’s Finance Minister, Nirmala Sitharaman, disclosed this news earlier today while delivering India’s annual budget. In her speech, Sitharaman said rolling out a central bank-issued digital currency (CBDC) would give India’s digital industry a massive boost.
According to Sitharaman, the CBDC would also help create a more efficient and cheaper currency management system. While she did not disclose details of how the digital rupee would work, Sitharaman said it would leverage the blockchain and other technologies. Notably, India’s next financial year (2022-2023) commences on April 1.
If India sticks to its plans to launch a CBDC, it will become one of the largest economies in the world to achieve this feat. While China has been working on its digital yuan since 2014, it is yet to announce when it seeks to launch its CBDC. Only two countries have rolled out a digital version of their currencies thus far. These are the Bahamas, with Sand Dollar, and Nigeria, with e-Naira.
Plans to tax crypto
In her speech, Sitharaman clarified the Finance Ministry’s stance on the taxation of digital assets and other virtual assets, proposing a 30% tax income obtained from transacting with cryptos.
On top of this, she suggested that the Indian government should bring the entire sector under the tax net by introducing a 1% tax deducted at source (TDS) for crypto transactions that cross a certain threshold. Sitharaman added that gifts in digital assets would also be subject to taxation. Reportedly, the tax proposals will come into effect from April 1 after the Parliament passes the Union Budget.
This news comes as the Indian government continues trying to regulate the nascent asset class instead of following in China’s footsteps and implementing an outright ban on the sector. However, experts expect that the country will introduce strict regulations.
Meanwhile, the crypto market is staging a recovery after fears of the US Federal Reserve hiking rates triggered a crash. At the time of writing, Bitcoin (BTC/USD), the largest crypto by capitalization, is changing hands at $38,455.13 (£28,486.60) after gaining 2.97% over the past 24 hours.
The altcoin market is also making a comeback, with Solana (SOL/USD) and Terra (LUNA/USD) being the biggest gainers in the top-10 after surging 16.36% and 13.43%, respectively, to trade at $106.36 (£78.79) and $52.25 (£38.71), respectively.
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