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While explaining the difference between Digital Rupee, digital assets and cryptocurrencies, Finance Minister Nirmala Sitharaman today pointed out that what RBI will be issuing is a digital currency, and everything that prevails outside of it is assets created by individuals. And profits made out of transactions of those assets will be taxed at 30%.
While presenting the Union Budget earlier today, FM Sitharaman had mentioned that ‘RBI will be introducing digital rupee soon’ and in another part, she also said that ‘digital assets will be taxed at 30%’. And these two statements together created a lot of confusion among the investors.
A currency is a currency only when it issued by the central bank, even if Crypto, anything that is outside of that we loosely refer it to cryptocurrency but they are not currencies, FM explained during a press conference.
Let's first understand we are not taxing currencies that are yet to be issued. And what RBI will be issuing is a digital currency, and everything that prevails outside of it is assets created by individuals. And profits made out of transactions of those assets will be taxed at 30%.
We are also tracking every trade of money in that by saying 1% TDS will be imposed on every transaction.
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Crypto or digital currencies are the latest fad across the world and India will next fiscal, beginning April 1, have its own version of the same which essentially would mirror the prevalent physical currency in digital form.
The currency, called 'digital rupee', will be issued by the Reserve Bank in digital form and will be fungible with physical currency.
The exact regulation governing this Central Bank Digital Currency (CBDC) is yet to be finalised.
CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies or cryptocurrency that have mushroomed over the last decade. Private virtual currencies do not represent any person's debt or liabilities as there is no issuer. They are not money and certainly not currency.
The RBI has been vehemently opposing private cryptocurrencies as they could have implications on national security and financial stability.
