Indian Union Budget 2022
Budget 2022 Highlight: A digital rupee will be issued, with gains on digital assets taxed at 30%.
Cryptocurrency will be taxed at 30% in the Budget of 2022. Meanwhile, the central bank digital currency (CBDC) is a digital version of fiat currency supported by blockchain that can be transacted via wallets and is governed by the central bank.
Starting in 2022-23, the Reserve Bank of India will issue a new digital rupee based on blockchain technology. Finance Minister Nirmala Sitharaman made the announcement today during the Union Budget 2022. Blockchain technology is also used to power cryptocurrencies and non-fungible tokens (NFTs), and it is a real-time distributed ledger.
The transaction records on a blockchain can’t be modified, and the ledger is transparent and legitimate, which is why it’s employed in cryptocurrency.
Meanwhile, the government has announced that any income generated from the transfer of digital assets will be taxed at a rate of 30%. This will influence gains from bitcoin and non-ferrous metals, both of which have enjoyed recent growth in India. “Except the cost of acquisition, no deduction in respect of any expenditure or allowance shall be permitted in computing such income.” Furthermore, any loss incurred as a result of the transfer of a virtual digital asset cannot be offset against any other source of revenue,” she noted.
The government has additionally legislated for TDS on payments made concerning the transfer of virtual digital assets at a rate of 1% of such consideration above a monetary threshold to capture transaction details. Giving a virtual digital asset as a gift is also recommended to tax the recipient’s hands.
“Digital currency would also lead to a more efficient and cheaper currency management system,” Sitharaman said during the Budget 2022 session in Parliament. As a result, it is suggested that the Reserve Bank of India produce digital rupees utilizing blockchain and other technology beginning in 2022 and 2023.”
The central bank digital currency (CBDC) is a digital form of fiat currency supported by blockchain and governed by the central bank. CBDC is distinct from decentralized virtual currencies and crypto assets, which are not issued by the government and do not have the status of “legal tender.” It allows users to make domestic and cross-border transactions without the involvement of a third party or a bank.
The decision comes as the Indian government prepares to submit a bill prohibiting “all private cryptocurrencies in India” with “limited exceptions.” The launch of a digital currency will not be limited to India. Nigeria established eNaira, a non-interest-paying CBDC, in October 2021. CBDCs have also been introduced in the Bahamas and five additional East Caribbean islands.