India's Own Digital Currency in FY23, Digital Assets To Be Taxed At 30% Besides digital rupee, Finance Minister Nirmala Sitharaman also announced tax regime for digital assets

By S Shanthi

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Doordarshan Live

India's own digital currency will soon be a reality. While presenting her fourth budget, Finance Minister Nirmala Sitharaman announced that the digital currency will be issued by the Reserve Bank of India (RBI) in 2022-23.

The digital rupee or central bank digital currency will be introduced using blockchain, said the minister, while adding that it will give a big boost to the economy. Simultaneously, Sitharaman also announced a 30 per cent tax on the proceeds of virtual or digital assets. "Income from transfer of digital assets to be taxed at 30 per cent," she said.

A TDS of 1 per cent will be levied for transactions above a certain threshold. Further, recipients will be taxed in case of a gift of virtual digital assets.

The government had announced its plans to introduce a bill to regulate cryptocurrency in the winter session of Parliament, but it did not happen. Moreover, in July 2021, the RBI had said that it was working towards its own digital currency. RBI deputy governor T Rabi Sankar had called it Central Bank Digital Currency (CBDC) and said that it would be the same as a fiat currency and exchangeable one-to-one with the fiat currency.

The RBI had often mentioned that cryptocurrencies like BitCoin, Ethereum and Dogecoin among many others pose a risk to financial stability. It had warned investors to not get "lured" by the promises of returns on cryptocurrencies.

The current announcement of a digital currency based on blockchain is expected to lead to a more efficient and cheaper currency management system.

"The move to tax virtual digital assets gives the entire ecosystem including investors and exchanges transparency on the road ahead. 30% tax on income from virtual digital assets, while high, is a positive step as it legitimizes crypto and hints at an optimistic sentiment towards further acceptance of crypto and NFTs across stakeholders in the country. The government has come a long way in its stance towards crypto from last Feb to today and we are confident that this will herald a new era of growth and innovation for India in a Web 3.0 world," said Avinash Shekhar, CEO, ZebPay, a crypto exchange platform.

He further added that the announcement on the launch of a Digital Rupee using blockchain issued by the RBI will familiarise Indians with the benefits and efficiency of virtual currency, building an appetite for the crypto, blockchain and the multitudes of innovations and employment opportunities that these technologies are capable of fostering.

Swapnil Pawar, founder, ASQI, a blockchain startup, said that the move to tax digital assets is a welcome one, since it removes the potential confusion in tax filing by crypto-investors. "Taxing of gifts and TDS are also useful to reduce abuse of anonymity in the crypto domain. We believe that the future of crypto innovation is in KYC-compliant transactions in legally recognized tokens," he said.

Wavy Line
S Shanthi

Senior Assistant Editor

Shanthi specializes in writing sector-specific trends, interviews and startup profiles. She has worked as a feature writer for over a decade in several print and digital media companies. 

 

Related Topics

Growing a Business

10 Growth Strategies Every Business Owner Should Know

Effective growth strategies are vital for businesses aiming to achieve sustainable growth and long-term success.

Leadership

5 Traits and Characteristics of Successful Entrepreneurs in 2023

Entrepreneurship has become the new trending topic in the business world. In 2023, the entrepreneurial world is expected to flourish more than ever, and it will take a certain set of skills to be a successful entrepreneur. This article highlights what it takes to be a successful entrepreneur in 2023.

Leadership

I Accidentally Became a Successful Entrepreneur. Here Are 5 Mistakes I Learned to Avoid When Starting a Business

PR is, at its core, storytelling. And the story of my now-thriving solo-owned business has been fraught with as many mistakes as successes, as many fall down the ladder as steps up. It's from my missteps, in fact, that I learned even more than from my triumphs, and this article presents 5 of my biggest blunders on the road to a flourishing small business.

Growing a Business

14 Easy Ways to Rank Your Website Higher on Google

Despite Google's algorithm and regular updates, you can quickly boost your website's ranking with these tips.

Business News

Uber Eats Deliveries Are Flooding a Los Angeles Neighborhood — Except No One Knows Who Placed the Orders

Residents of L.A.'s Highland Park neighborhood are once again the target of dozens of unsolicited Uber Eats orders. The "annoying and somewhat disturbing" mystery is gripping the city.

Business News

Google Wants Employees Back in the Office, Considering 'Attendance' in Performance Reviews

In an email, a Google executive reportedly told employees that many new features and products unveiled during Google's developer conference last month were "conceived, developed, and built by teams working side by side."