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What is the Digital Rupee announced in Union Budget 2022?

Digital Rupee is a new concept and soon to be a legit digital currency of India.

In the Union Budget 2022, Finance Minister Nirmala Sitharaman has announced the launch of the digital Rupee, India’s own digital currency, onwards 2022-23.

The Digital Rupee is going to be a central bank digital currency (CBDC) launched by the Reserve Bank of India.

It is to be noted that the RBI has been intending to launch a CBDC for some time now. Its intention has finally come to fruition now.

Also, read about the Union Budget 2022’s impact on the market.

Let’s first understand why we keep using the term CBDC to refer to the new crypto of India.

What is CDBC and Digital Rupee?

A CBDC is an electronic record or digital token of a country’s official currency. As such, it is issued and regulated by the nation’s monetary authority or central bank.

In simpler terms, it is a legal tender issued by the country in digital form.

The Finance Minister in the Union Budget 2022 has announced that the Digital Rupee is going to be India’s central bank digital currency (CBDC) 2022-23 onwards.

How can the Digital Rupee help the Indian crypto investor?

While as of now, not much can be ascertained about the nature, value, or investing aspects of the Digital Rupee, the decision in itself is a victory for the average Indian crypto investor.

It should be noted that there were mass speculations that the Indian government might ban cryptocurrencies or find a constrained way of regulating the same.

The launch of the Digital Rupee in the Union Budget 2022 has at least ensured that the “Crypto-ban” isn’t going to happen anytime soon in the country.

An additional benefit of the Digital Rupee for the general populous, (not only the crypto enthusiasts) will be that the transactions will be instantaneous as compared to the currently operating digital modes of payments and transactions.

Government’s 30% tax on cryptocurrencies

Apart from the introduction of the Digital Rupee, the government has now introduced a 30% tax on the transfer of digital assets.

During the budget 2022, Finance Minister Nirmala Sitharaman has announced that income from the transfer of digital assets shall be taxed at the highest tax slab rate of 30%.

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

In simpler terms, it means that profits generated on the sale of any digital assets be it cryptocurrency or NFTs shall be taxed at a flat 30%.

Furthermore, a TDS(tax dedicated at source) of 1% will also be applicable at the transaction of any digital asset.

Additionally, in case the digital assets are exchanged in the form of gifts, the tax will be liable to be paid by the recipient party.

How will this affect the enthusiasm of Indian crypto investors?

The finance minister has announced two major decisions that will be impacting the status of cryptocurrencies in India

The first of which is the launch of India’s own CBDC (central bank digital currency ), the Digital Rupee.

The second of which is the 30% flat taxation on the income generated by the transfer of digital assets( cryptocurrencies and NFTs).

Both these decisions are going to heavily change the investing domain for Indian crypto investors.

According to veteran crypto traders, this move comes with its pros and cons for the crypto community.

It is appreciable that the government has finally taken a big step towards recognizing cryptocurrencies.

However inevitably, many in the crypto community believe that in order to regulate the exchange of digital assets in the country, the government has enforced such taxation to discourage people from trading in cryptos.

There are still many concerns regarding the severity of the potential crypto-regulations, the exact specification of what is defined by the term “digital assets”, and many more.

Once the CBDC comes into effect, the community might get a clearer picture of crypto’s future in India.

This article is brought to you in association with jobaaj.com

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