The Indian government has ordered its Reserve Bank to have a digital version of the Rupee into circulation. Its annual budget has also outlined plans to raise revenue with a 30 per cent income tax on cryptocurrency and non-fungible tokens.
Indian Prime Minister Narendra Modi said the digital Rupee will open new opportunities for the Fintech sector and significantly boost the country's digital economy.
"This digital Rupee, which is our physical currency now, will have a digital form, and RBI will control it. It can be exchanged with physical currency. Digital Rupee will open up new opportunities for the Fintech sector," said PM Modi while addressing Budget 2022.
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"Those who have Sukanya Samriddhi account and PPF account in the post office also do not need to go to the post office to deposit their instalments. Now they will be able to transfer online directly from their bank account," he said.
He further added that the online fund transfer facility will be available in post office accounts like banks.
"Now mobile banking, internet banking, ATM and online fund transfer facility will be available in post office accounts, like banks. At present, there are more than 1.5 lakh post offices in the country, most of which are in villages," he added.
Indian Finance Minister Nirmala Sitharaman announced in her budget speech that income from digital asset transfers will be taxed at a rate of 30 per cent.
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She said Central Bank Digital Currency (CBDC) will significantly boost the digital economy.
The Finance Minister also announced the imposition of 1 per cent TDS on payment made in relation to the transfer of virtual digital assets. The move is aimed to capture the transaction details in digital currency.
"Gift of the virtual digital asset is also proposed to be taxed in the hands of the recipient," the Finance Minister said.
"We are not taxing currency that's yet to be issued. Cryptocurrencies are not currencies. RBI is going to issue its digital currency. Everything outside is assets created by individuals," she said.
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According to Indian media reports, Indian Finance Secretary TV Somanathan said that Cryptocurrencies like Bitcoin or Ethereum will never become legal tender. Only the digital Rupee issued by the Reserve Bank of India (RBI) would be the legal tender.
"Digital Rupee will be backed by RBI, which will never default. Money will be of RBI, but the nature will be digital. The digital Rupee issued by RBI will be the legal tender. We can purchase non-digital assets with the digital Rupee like we purchase an ice cream or other things using our wallet or payments through UPI platform."
(ANI)