Home / Economy / RBI's digital currency to be legal tender but others …: Finance secy on crypto

Amid the government's changing stance on cryptos with the Budget 2022-23 announcement regarding a 30 per cent tax on them, Finance Secretary TV Somanathan today said India's digital currency will be backed by the Reserve Bank of India (RBI), which will be legal in the country. He also money will be of the RBI but the nature will be "digital". 

“Digital rupee issued by the RBI will be a legal tender. Rest all aren't legal tender, will not, will never become legal tender," he added, news agency ANI reported.

As per Somanathan, cryptocurrencies like Bitcoin, Ethereum or non-fungible tokens (NFT) will “never become legal tender" in India. “Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorisation by govt," he added.

Finance Minister Nirmala Sitharaman in her Budget 2022 announcement had proposed a 30 per cent tax on digital assets. She also said the RBI-issued 'Digital Rupee' will be recognised as currency, and the government will levy a30 per cent tax on gains made from any other private digital assets from April 1.

Also read: Next year's I-T return to have separate column for crypto income: Revenue Secy

“I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition," the FM said.

Somanathan said people investing in private crypto should understand that it does not have the authorisation of the government. “There is no guarantee whether your investment will be successful or not, one may suffer losses and govt is not responsible for this," he added.

As per the finance minister, the RBI will introduce the Central Bank Digital Currency (CBDC) as India’s official digital rupee in 2022-23. The announcement had come after months of speculations around the introduction of a blockchain-based official digital currency of India.

“The introduction of the CBDC will give a big boost to India’s digital economy. The digital currency will also lead to a more efficient and cheaper currency management system," Sitharaman said. The government is yet to spell out the exact details about the CBDC, its regulations and launch timeline are yet to be announced.

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