Budget 2022: FM announces Digital rupee introduction by RBI

By Team Newsable | First Published Feb 1, 2022, 12:13 PM IST

Union Finance Minister Nirmala Sitharaman stated in her presentation of the Union Budget 2022-23 that the Reserve Bank of India (RBI) will implement the digital rupee in 2022-23.

Union Finance Minister Nirmala Sitharaman stated in her presentation of the Union Budget 2022-23 on Tuesday that the Reserve Bank of India (RBI) will implement the digital rupee in 2022-23. It is likely to have a significant impact on the economy. During her Budget statement, the Finance Minister was anticipated to offer greater clarification on the usage of Bitcoin. However, no mention of Bitcoin or other cryptocurrencies was made. Instead, a crypto tax has been implemented.

Meanwhile, the government has stated that any revenue derived from the transfer of digital assets would be taxed at a 30% rate. This will have an influence on gains from bitcoin and NFTs, both of which have enjoyed a recent surge in India.

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The development is considered as a major boost for the government's "Digital India" initiative. It also comes at a time when bitcoin legislation is being debated. The RBI has expressed "severe worries" about private cryptocurrencies, claiming that they may generate financial instability.

Probir Roy Chowdhury, Partner at J Sagar Associates said, "Industry stakeholders will certainly appreciate the introduction of a centralized digital currency by the government as it promotes a reliable and alternate payment tender. That being said, the proposed digital rupee and its pricing will be entirely regulated and controlled by the government."

"Apart from the ‘digital rupee’, the government is not keen to recognize the availability of any other kind of digital currency in India. As a result, free-market players will not be permitted to operate or use cryptocurrencies other than the digital currency issued by RBI. This will prevent market players from entering into several digital transactions that require other kinds of cryptocurrencies. Hence, the only way to bridge this gap would be if the government came up with a set of regulations to govern all kinds of digital currencies in use in India, instead of a sole government-controlled currency," he added.

Last year, the RBI announced its ambition to launch a digital currency. The government was seeking to outlaw the usage of cryptocurrencies in the country at the time. However, everything came to a halt with the formation of a committee to have discussions with significant players and make suggestions on the future of cryptocurrencies in the nation. Later, a draft of the crypto law revealed that the government may still ban all cryptocurrencies in the nation in order to promote a potential digital currency from the RBI.

Finance Minister Nirmala Sitharaman did not announce any changes to income tax rates for 2022-23, which was a significant disappointment for salaried persons. Income tax rates for 2022-23 have likewise not been altered.

Also Read | Union Budget 2022 LIVE: Big expectations from Finance Minister Nirmala Sitharaman's budget

Also Read | Budget 2022: No change in Income Tax slabs for tax paying individuals, tax rates announced

Also Read | Cryptocurrency regulation: Govt unlikely to table Bill in Winter Session?

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