India’s Finance Minister Announce CBDC Launch And 30% Crypto Tax
India’s central bank digital currency (CBDC) will arrive next financial year, the country’s Finance Minister announced, and called for a 30% tax on income generated from crypto.
Nirmala Sitharaman, the Finance Minister of India, has announced that the country’s central bank will launch a blockchain-based CBDC in the next financial year (taking place between 1 April 2022 and 31 March 2023).
In a separate announcement Sitharaman stated that the nation has decided to tax 30% of all cryptocurrency activities, similar to winning lottery or gambling.
India’s CBDC
India has firm intentions to be part in the digital race and roll out a central bank digital currency. In August, the Reserve Bank of India announced it would launch trial programs to examine how a potential e-rupee would interact with the local monetary system.
The initial plan was to start the experiment by the end of 2021, but it was postponed for the ongoing year.
According to Reuters report, Finance Minister Nirmala Sitharaman revealed that the central bank will introduce its CBDC sometime between April 1, 2022, and March 31, 2023, saying that it will give a “big boost” to the local economy.
“Digital currency will also lead to a more efficient and cheaper currency management system.”
The country’s central bank Reserve Bank of India has raised issues around private cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). Last year many reports claimed that the institution had proposed a total ban on crypto, but it turned out that they had decided to regulate the space instead of a ban.
Prime Minister of India Narendra Modi is a big proponent of implementing comprehensive rules for digital assets. Last year he proposed democratic countries like Australia and other states in the Indo-Pacific region to work together to design a regulatory framework for digital assets.
Indians are on top of the list for the number of crypto investors by country. According to some estimations there are about 20 million local investors who have allocated more than $5.3 billion in the industry.
30% Crypto Tax
Sitharaman also announced separately that any income generated from cryptocurrency activity be taxed at 30%. The Finance Minister added that gifts of digital assets should also be a subject of taxation. She also added that any loss from virtual digital assets can’t be set off against other gains.
Sitharaman believes that the new policy could bring some clarity on transactions involving cryptocurrencies and boost investments in the sector:
“There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”
The tax proposals will come into effect from April 1 after the passage of the Union Budget in Parliament.
