According to India’s finance minister, the country will soon introduce a digital version of the rupee. In her annual budget speech, Nirmala Sitharaman also revealed intentions for a 30% tax on digital asset income.
India to launch a digital rupee this year
The country’s highest tax band would be claimed from profits from trading or transferring cryptocurrencies and non-fungible tokens. India is the most recent major economy to introduce an official virtual currency, following China’s implementation of a digital yuan.
Nirmala Sitharaman stated on Tuesday that: “Introduction of a central bank digital currency will give a boost, a big boost to (the) digital economy. Digital currency will also lead to a more efficient and cheaper currency management system.”
The Finance Minister stressed in her speech that the size and frequency of digital asset transactions necessitate the creation of a specific tax system in which earnings from transactions are taxed.
The tax would also apply to digital assets given as gifts, with recipients being required to pay the levy. All other taxes would be refunded at source. The proposal was made amid Ms. Sitharaman’s presentation of the federal government’s annual budget.
The pandemic has had a significant impact on Asia’s third-largest economy, with major employment losses and rising prices. In the wake of India’s demonetization policy, the country’s central bank announcing a digital currency is an interesting development.
In comparison, China has banned all Bitcoin and cryptocurrency transactions. The Bank of England and HM Treasury have started a consultation process to decide whether the UK should go forward with creating a “Britcoin.”
The Indian government’s plan to introduce a digital currency was well received by cryptocurrency investors.